Foresight launches new open-ended investment fund

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Foresight Group LLP (Foresight) has launched the FP Foresight Global Real Infrastructure Fund (GRIF). The Fund, which has received FCA regulatory approval, will be actively managed and will invest directly into publicly listed companies that own and operate real infrastructure or renewable energy assets globally.  It is targeting a total return of more than 3% per annum above the rate of UK inflation (measured by UK CPI).

GRIF’s model portfolio has consistently outperformed both UK and global equity markets over the last five years, delivering higher returns, paired with lower volatility than the FTSE All Share Index and the FTSE All World Index.  Foresight attributes the outperformance to the focus on real infrastructure, which is defined as companies that own and operate real assets with long-term, inflation-linked contracts attached, rather than cyclical equity infrastructure companies that are active in the broader infrastructure environment without true infrastructure characteristics.

Sustainability is a key consideration in the investment team’s stock selection process.  The fund will invest only in the shares of companies that the team assesses deliver a net social or environmental benefit and comply with the ten principles of the United Nations Global Compact for business.

As traditional sources of income face structural issues, renewable energy and infrastructure become increasingly attractive asset classes and a mainstay of investing for diversification.  These assets are often characterised by stable, project-level cashflows and deliver predictable income with lower volatility, low correlated to traditional asset classes.

Ahead of the Fund’s launch, Foresight conducted research with 144 advisers that revealed a strong appetite for global infrastructure amidst fears of a sustained downturn, Brexit uncertainty and market instability.  An overwhelming majority (80%) of advisers now expects to see more global infrastructure funds recommended to clients as the asset class continues to become more mainstream. 66% of advisers expect to see clients’ allocations to global infrastructure increase over the next three years - more than double the number since 2017 when just 32% of advisers predicted it would become more popular.

GRIF will draw from an investible universe of ~91 listed renewable and infrastructure investment companies from a global pool of 5,700 companies.  The Fund will invest in a diverse portfolio of companies that own and operate assets ranging from solar power and geothermal generation plants to medical office buildings and storage facilities that have strong public sector counterparties and stable, predictable demand. These listed companies have a combined market capitalisation of ~GBP 180bn (US$ 229.14 billion) and have grown in number by 259% since 2010.

The Fund will build on the success of the FP Foresight UK Infrastructure Income Fund (FIIF), which celebrated its first anniversary in December 2018 and delivered a full year yield of 5.35%. More recently, the Fund was ranked number one across total return, maximum drawdown and standard deviation by CityWire Selector on a one-year basis for two consecutive months.

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