Professional article in BAI e.V. Newsletter III / 2020
by Markus Landes, SOLUTIO AG
(DE) Auswirkungen von Marktverwerfungen auf die Anlageklasse Infrastruktur
The effects of the current Covid 19 crisis are far from being fully foreseeable, but it already seems inevitable that the infrastructure asset class, or at least individual sectors, will also be affected by the crisis. Questions that therefore concern investors are how and to what extent the current crisis will affect their infrastructure portfolios.
In principle, infrastructure investments, and in particular the area of non-listed (private) vehicles, are considered a relatively safe haven in times of market disruption. For example, infrastructure investments are usually attributed a natural protection against inflation and low sensitivity to economic downturns. The reasons for this are plausible, but so far there are hardly any empirical studies dealing with infrastructure facilities in times of crisis. One reason for this is that this is still a young asset class whose importance only increased after the last major crisis – the 2007 global financial crisis (GFC). On the other hand, there are hardly any data providers or managers who have a long-term, consistent investment strategy from which a meaningful data series can be derived up to the GFC.
SOLUTIO AG, together with UBS Multi Manager Infrastructure (UBS MMI), is launching the global investment program series APPIA in 2011. UBS MMI has been investing in infrastructure funds since 2004 and has provided us with this data for analysis. Specifically, these are the cash flows and valuations of fund investments between 2004 and 2019. The period of over 16 years covers several market and economic cycles and represents one of the longest representative time series known to us. It is noteworthy that the strategy has been very constant since the beginning of the investment activity and therefore no distortions or special effects need to be taken into account. The strategic focus is on the developed markets of North America and Europe and on the Core/Va-lue Add Brownfield segment. The portfolio is therefore rather conservative and should reflect the fundamental characteristics of infrastructure assets well.
(Read the full article here in the German download PDF.)
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