In the back
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[ WHAT I BOUGHT LAST ]
The focus of the team is on assets
the UK will find indispensable in
the years ahead, including schools,
student accommodation and energy
generation
Albemarle’s Charlie Parker says this fund offers access to property-
like returns without the liquidity risk associated with owning the
asset class in an open-ended fund
VT Gravis Infrastructure
Income
A
s the economic
environment
stabilises,
there is some emerging
evidence of inflation
returning around the
world. With this in
mind, assets that have
the potential to deliver
inflation-protected
returns over the long
term are beginning to
look valuable.
We recently added VT
Gravis Infrastructure
Income to our portfolios.
The fund’s aim is to
deliver regular income,
preserve capital and
protect against inflation
through a portfolio of
UK-listed infrastructure
investments,
predominantly UK
TRUSTNET
REITs. Its yield target is 5 This positions the fund
per cent a year.
towards holdings such as
hospitals leased by the
Linked in
government and away
Of crucial importance
from those infrastructure
with infrastructure
investments that rely
investments is finding
on consumer demand
holdings where
– such as toll roads – to
the majority of the
drive their revenues.
underlying revenue
The focus of the team
is linked to inflation.
is on assets the UK will
For example, owning
find indispensable in the
assets that are leased
years ahead, including
for the long term with
schools, student
inflation-protected
accommodation and
contracts. This fund
energy generation. This
seeks to achieve this aim has led it to invest in
by holding a minimum
cornerstone UK assets
of 75 per cent of assets in such as Heathrow Airport
infrastructure projects
and Thames Water.
that are supported by
We believe this fund
contracts from the UK
offers a good trade-off
government, either at a
by providing access to
local or national level.
property-like returns in
the UK but without the
liquidity risk associated
with owning the asset
class within an open-
ended fund. The fund
has a correlation of just
0.4 to the UK equity
market over the past 12
months, a relatively low
figure.
Looking up
There had been
concerns last year
that infrastructure
would be at risk from
a Jeremy Corbyn-
led government,
due to the Labour
leader’s enthusiasm
for nationalisation.
However, the
Conservative victory in
the general election has
led to renewed optimism
in the sector, with the
fund’s manager Will
Argent pointing out the
party has made clear its
support for existing PFI
concessions.
Investors should be
cautious as this fund’s
assets grow. Ultimately
it owns closed-ended
funds which can trade on
relatively wide spreads.
For this reason, the
liquidity profile requires
careful monitoring.
Yet we believe the fund
offers a more diversified
means of accessing some
of the niche closed-
ended vehicles in the
UK than buying them
directly. It has some 30
holdings and therefore
provides for a greater
level of liquidity than,
for example, owning the
specific closed-ended
funds that invest in GP
surgeries or care homes,
which deliver a similar
return profile with more
idiosyncratic risks.
Charlie Parker is
managing director
at Albemarle Street
Partners
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