In this Spring 2017 issue of the EDHEC/IP&E Research Supplement, research by EDHECinfra includes the summary results of the first in-depth survey of institutional investors’ perceptions and expectations of infrastructure investment.
It documents the reasons for investing in infrastructure and whether currently available investment products or strategies are helping investors meet these objectives.
The findings provide a first step towards integrating infrastructure in long-term investment solutions. Key findings are reported in the following areas: investment beliefs; products and objectives; benchmarking; and ESG (environmental, social and governance).
We also ask whether focusing on listed infrastructure stocks creates diversification benefits previously unavailable to large investors that are already active in public markets. We conclude that what is typically referred to as listed infrastructure is not an asset class or a unique combination of market factors, but instead cannot be persistently distinguished from existing exposures in investors’ portfolios.
In this paper, we describe the objectives, roadmap and recent progress of academic research with respect to benchmarking the financial performance of privately-held infrastructure debt or equity investment, with a focus on the recent development of a new framework to collect data and evaluate such assets.
To determine a way forward, we take the following approach: we start from the reasons why infrastructure investment benchmarks are in demand and list the key questions that such benchmarks should be expected to answer. Unfortunately, they remain very difficult to answer today, for lack of the relevant information.
Hence, we propose a roadmap to develop a definition, valuation, data collection and portfolio construction framework of privately-held infrastructure debt and equity cash flows designed to answer these important questions.
In this paper sponsored by the Global Infrastructure Hub (a G20 Initiative) EDHECinfra presents the result of the first in-depth survey of institutional investors’ perceptions and expectations of infrastructure investment, and asks what next generation of investment products can better answer the needs of long-term investors in infrastructure.
The paper highlights a recent research quandary with respect to infrastructure equity investment which has also been a source of interrogation for final investors: while the economics of underlying infrastructure investment suggests a low and potentially attractive risk profile, the experience of investors and available research evidence have been different and rather mixed.
This paper attempts to explain why this has been the case and what new research and benchmarking efforts are necessary to create investment solutions that realign expectation and observed investment performance as well as to inform the regulatory debate in relation to institutional investing in long-term assets like infrastructure equity.
- Page 2 of 2