The outlook for the UK infrastructure sector, which covers renewable energy, transport and utility networks, digital and social infrastructure, looks favourable compared to traditional asset classes such as bonds and equities in the year ahead, says TIME Investments (“TIME”), which specialises in asset-backed and income-producing investments.
Evidence so far in January 2022 shows that it is likely to be a challenging year for financial markets as economies rebuild and adapt following the COVID-19 pandemic. There is growing pressure from rising inflation, tightening of financial conditions, heightened volatility, and economic growth that has most likely peaked and could roll over. In contrast, these factors are likely to have a less severe impact on many infrastructure assets primarily because of the defensive characteristics that underpin them. These include long-term inflation-linked cash flows from high-quality counterparties, such as the government, and the fact that the assets often provide essential assets and services to an economy, enabling it to function successfully.
The sector is also set to benefit from the formation of the UK Infrastructure Bank, which is due to unveil a more detailed strategy to support digital connectivity and emerging technologies. This will help enable the transition to net zero through things like renewables and low carbon transport. The increasing focus on Environmental Social and Governance practices (ESG) and tackling climate change also provides a wealth of opportunities for companies which harness energy from renewable sources.
Chris Cox, CFA, Fund Manager of TIME:UK Infrastructure Income said: “Prevailing economic headwinds are likely to make 2022 a more challenging year for generating inflation beating returns in the financial markets compared to last year. The characteristics of UK infrastructure means that it is well-placed to provide investors with an attractive alternative to equities and bonds, offering investors a degree of inflation protection, diversification, relatively low levels of volatility and an attractive income distribution.”
The favourable performance of the sector is highlighted by TIME:UK Infrastructure Income which delivered returns of 11.11% over the twelve months to 31 December 2021, with very low levels of volatility, giving investors a total return of 35.31% since its launch in April 2018. The Fund seeks to deliver a consistent income return with long-term capital growth potential from a diversified portfolio of infrastructure exposed securities.
Conversion to UK UCITS
The Fund is now structured as a UK UCITS, which offers an enhanced level of regulation to the highest available in the UK for an equities fund. UK UCITS funds are authorised by the FCA and are subject to more stringent regulation and stricter investment conditions than Non-UCITS Retail Schemes (“NURS”) and as such are designed to ensure stronger protection for all investors, especially retail investors.
In response to the Investment Association (IA) launching their new infrastructure sector in late 2021, TIME:UK Infrastructure Income has formally changed its sector classification and benchmark to the IA Infrastructure sector. The new sector acknowledges the growing demand from retail investors for a relevant benchmark, as well as highlighting the continued growth in investment and appetite for UK infrastructure funds.
The minimum investment for retail investors is £5,000. Investors are able to access the Fund through ISAs, SIPPs, SSASs and offshore bonds via income or accumulation shares.
Posted: 18/01/2022 Categories: Income, Infrastructure, News, Press, TIME:UK Infrastructure Income