Foresight Group LLP (“Foresight”) has launched the FP Foresight UK Infrastructure Income Fund (“the Fund”). The Fund, which has received FCA regulatory approval, is actively managed and will invest in UK listed renewable energy and infrastructure fund / investment company equities and bonds. It will target an annual income of 5% per annum with dividends paid quarterly.
Available on a variety of platforms and wraps, the Fund has a minimum investment of £1,000, or £100 per month for regular savings, and comprises one share class for both retail and institutional investors with the option for either income or accumulation.
The Fund’s model portfolio delivers higher returns and lower volatility than the FTSE All Share. In the last two years, the total return for the Fund’s model portfolio was 24% vs 20.7% for the FTSE All Share and volatility was just 4.8% compared to 15.2%1.
The UK has seen unprecedented growth in renewable energy and infrastructure investment over the last five years that is expected to continue for the foreseeable future. Indeed, the forecast for the next eight years shows a 27% increase in cumulative UK renewable energy generation2.
Foresight believes that renewable energy and infrastructure are attractive asset classes as they are characterised by stable and predictable demand, high barriers to entry and long term contracted revenue streams. UK listed renewable energy and infrastructure funds / investment companies also benefit from protection from inflation as a high proportion of underlying asset revenues are directly linked to inflation. The comfortable spread between listed UK renewable energy and infrastructure funds’ discount rates and the risk-free rate provides a further buffer to interest rate rises.
Ahead of the fund launch Foresight carried out research3 with financial advisers which revealed that three quarters (75%) are bullish about the investment outlook for UK infrastructure assets and the majority (59%) expect to see increasing demand amongst clients for exposure to the sector through SIPPs and ISAs over the next five years.
The research further revealed that infrastructure is poised to become an increasingly popular asset class for investors as it mitigates four of the biggest headwinds facing client portfolios. These were identified as volatility by more than half (56%) of advisers, a market correction (49%); inflation (42%) and interest rate rises (28%). Indeed three in ten (32%) advisers are looking to increase their clients’ allocation to the asset class over the next three years.
The UK has been consistently assessed as one of the top most attractive countries for renewable energy and infrastructure investment. Much of this investment has come from UK listed renewable energy and infrastructure funds and investment companies, of which there are over 20 players with combined market capitalisation worth £17bn (which has grown from over £60m in 2004).
Jamie Richards, Partner at Foresight, commented: “The new FP Foresight UK Infrastructure Income Fund enables investors to capitalise on a thriving energysector, which offers numerous investment opportunities across generation, transmission and distribution technologies. The global decarbonisation agenda will lead to a growing reliance on renewable energy, which is becoming cheaper to produce and easier to store.
“At Foresight, we have a specialist focus on energy infrastructure combined with a tradition of innovation in creating investment solutions that respond to investors’ needs. We manage funds for more than 22,000 private investors and for some of the world’s leading financial institutions. We’re excited to be launching this infrastructure income fund which we expect to have broad appeal.”
Philip Payne, Director of Mulberry Wealth Management said: ““Infrastructure has historically been regarded as the domain of institutional investors. However, we have found the asset class becoming increasingly attractive for our clients as more opportunities open up. Investors find the predictable revenue streams and stable returns compelling, particularly in times of uncertainty when markets are rocked by volatility. Foresight has a strong track record of innovation and infrastructure investment and we expect our clients will find the Fund’s target yield of 5% particularly appealing”
The Fund will be actively managed and distributed by Foresight Group LLP, a leading and award-winning independent infrastructure and private equity asset manager.