A Survey of Institutional Investors’ Perceptions and Expectations of Infrastructure Investment
This survey of investors’ perceptions and expectations of infrastructure investment maps current practices and bring more clarity about what role infrastructure investments can play to existing investors in infrastructure, and to the numerous potential new investors in this area. These results will support the development of the most relevant investment solutions by asset managers who have access to a pipeline of underlying infrastructure deals.
To this day, the debate around the role of infrastructure in asset allocation decisions has focused mainly on the implied characteristics of the underlying (e.g. predictable cash flows are expected to be useful in a liability-driven investment context).
The GIH/EDHEC-Risk Institute survey of investment practices in infrastructure will help make the reasons for such investment decisions more explicit, and help create the next generation of investment solutions using infrastructure assets to help investors meet their own goals.
The survey findings, which will be released during 2016, will help make infrastructure investment more relevant to institutional investors.
|||Towards better Products for Infrastructure Investors? A Survey of the Perceptions and Expectations of Institutional Investors in Infarstructure , In EDHEC Infrastructure Institute Publications, 2016.|
A Lack of Clarity
Infrastructure investment is now drawing considerable and growing interest from investors, most of which declare wanting to increase their allocation to infrastructure equity and debt. Nevertheless, there remains a certain degree of confusion and sometimes frustration with infrastructure investing.
For example, a recent Preqin survey reported that a third of respondents felt that fund managers and investors’ interest were not properly aligned when it came to investing in infrastructure-related vehicles (Preqin 2015). Such perceptions have fed a trend by which a number of pension funds and other large investors now consider investing directly in infrastructure assets, instead of delegating this task to a specialist manager.
In effect, different investors are looking for different things with infrastructure investment. The typical insurer is looking for a combination of duration and yield, while other fixed income and equity investors are interested in diversifying their corporate bond or venture capital allocations. Infrastructure is also used by some as part of an inflation hedging strategy. And while most investors see infrastructure investing as a long-term strategy, some do not.
Unfortunately, existing surveys limit themselves to computing the declared infrastructure allocations of investors and a clear picture of what role investors see infrastructure investment playing in their asset allocation process remains lacking.