EDHECinfra Announcement
EDHECinfra reveals industry standard for unlisted infrastructure benchmarks
Publication date: 2018-01-30

Singapore, 30 January 2018 – Based on preferences expressed by major institutions in a new survey, EDHECinfra is releasing a taxonomy of global indices and sub-indices to structure the infrastructure asset class.

In its effort to create global benchmarks for infrastructure investors, the EDHEC Infrastructure Institute (EDHECinfra) recently surveyed asset owners and managers about how these indices should be structured to best address their asset allocation and performance monitoring needs.

In the largest survey of its kind over 200 major infrastructure investors, including asset owners representing more than 10% of global AUM in 2017 (US$10 trillion), revealed their preferences for the segmentation of unlisted infrastructure. This framework establishes an industry standard for unlisted infrastructure benchmarks.

Over half of respondents to the survey were focused solely on infrastructure equity investment, while a third seek both infrastructure equity and debt.

Investors mostly chose to reject the geographic and sectoral categories typically used for capital markets benchmarks, preferring instead to understand their infrastructure exposures in terms of the level of economic development and investability of national markets. They also recognised the fundamental difference between infrastructure project financing and infrastructure ‘corporates’.

Focusing on individual sectors was not considered a structuring aspect of the asset class, instead, most asset owners asked for ‘broad sector’ indices and sub-indices using `business model’ filters rather than industrial ones.

In response to these preferences, EDHECinfra reveals the industry standard for unlisted infrastructure benchmarks, outlining a taxonomy of indices and sub-indices that can create the most useful framework of reference for the asset class. Two universes (debt and equity) are split either between broad areas of economic development or by types of corporate structure, leading to eight broad market indices that will provide a global view of the infrastructure asset class.

This taxonomy also includes a limited number of sub-indices for the purpose of performance monitoring. These thematic sub-indices (by business risk, sector groups, credit risk) represent specific risk profiles to track the risk-adjusted performance of most specialised managers or dedicated accounts focused on a sub-segment of the infrastructure market.

Key findings:

  • Almost 70% of respondents said economic development and infrastructure investability were the most relevant geographic segmentations for private infrastructure.
  • 90% of respondents said it was relevant or highly relevant to segment infrastructure investments by business model (contracted, regulated, merchant).
  • Investor’s views were relatively balanced on the segmentation of infrastructure by corporate structure. – 37% of respondents favour project finance specific benchmarks – 42% would rather use benchmarks with infrastructure projects and infrastructure corporates – 20% would prefer an infrastructure corporates only index
  • Infrastructure debt investors were almost unanimous (95%) in the need to bucket infrastructure debt by credit risk and maturity, highlighting the need to integrate private infrastructure debt in broader fixed income strategies.

Notes to editors:

Survey details:

Selecting reference indices for the infrastructure asset class. A survey of Investor preferences and the EDHECinfra families of infrastructure indices.

Download the full research paper here.

Authors:

Noël Amenc, Professor of Finance and Associate Dean, EDHEC Business School

Frédéric Blanc-Brude, Director, EDHEC Infrastructure Institute

EDHECinfra reveals industry standard for unlisted infrastructure benchmarks
Do NOT follow this link or you will be banned from the site!

DISCLAIMER

  • The information contained on the EDHECinfra website (the “information”) has been prepared by EDHECinfra solely for informational purposes, is not a recommendation to participate in any particular investment strategy and should not be considered as an investment advice or an offer to sell or buy certain securities.

    All information provided by EDHECinfra is impersonal and not tailored to the needs of any person, entity or group of persons. The information shall not be used for any unlawful or unauthorised purposes. The information is provided on an “as is” basis.

    Although EDHECinfra shall obtain information from sources which EDHECinfra considers to be reliable, neither EDHECinfra nor its information providers involved in, or related to, compiling, computing or creating the information (collectively, the “EDHECinfra Parties”) guarantees the accuracy and/or the completeness of any of this information.

    None of the EDHECinfra Parties makes any representation or warranty, express or implied, as to the results to be obtained by any person or entity from any use of this information, and the user of this information assumes the entire risk of any use made of this information. None of the EDHECinfra Parties makes any express or implied warranties, and the EDHECinfra Parties hereby expressly disclaim all implied warranties (including, without limitation, any implied warranties of accuracy, completeness, timeliness, sequence, currentness, merchantability, quality or fitness for a particular purpose) with respect to any of this information.

    Without limiting any of the foregoing, in no event shall any of the EDHECinfra Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits), even if notified of the possibility of such damages.

    All EDHECinfra Indices and data are the exclusive property of EDHECinfra. Information containing any historical information, data or analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Past performance does not guarantee future results. In many cases, hypothetical, back-tested results were achieved by means of the retroactive application of a simulation model and, as such, the corresponding results have inherent limitations.

    The Index returns shown do not represent the results of actual trading of investable assets/securities. EDHECinfra maintains the Index and calculates the Index levels and performance shown or discussed, but does not manage actual assets. Index returns do not reflect payment of any sales charges or fees an investor may pay to purchase the securities underlying the Index or investment funds that are intended to track the performance of the Index. The imposition of these fees and charges would cause actual and back-tested performance of the securities/fund to be lower than the Index performance shown. Back-tested performance may not reflect the impact that any material market or economic factors might have had on the advisor’s management of actual client assets.

    The information may be used to create works such as charts and reports. Limited extracts of information and/or data derived from the information may be distributed or redistributed provided this is done infrequently in a non-systematic manner. The information may be used within the framework of investment activities provided that it is not done in connection with the marketing or promotion of any financial instrument or investment product that makes any explicit reference to the trademarks licensed to EDHECinfra (EDHECinfra, Scientific Infra and any other trademarks licensed to EDHEC Group) and that is based on, or seeks to match, the performance of the whole, or any part, of a EDHECinfra index. Such use requires that the Subscriber first enters into a separate license agreement with EDHECinfra. The Information may not be used to verify or correct other data or information from other sources.

    The terms contained in this Disclaimer are in addition to the Terms of Service for users without a subscription applicable to the EDHECinfra website, which are incorporated herein by reference.

    This site uses cookies to deliver the services you request, improve user experience and measure audience. By continuing to browse our website, you are consenting to our use of cookies. Find out more about this in our Privacy policy.

  • X
    X