The VT UK Infrastructure Income Fund (UKIIF), which is advised by GCO Advisory – a subsidiary of Gravis Capital Partners – has raised over GBP120 million of assets in the 12 months since its launch.
The fund has returned over 11 per cent to investors including three full and one part-period dividend payments totalling 4.5940p in respect of the C GBP income share class.
The fund is expected to achieve its target of 5 per cent distributions from the next dividend payment to be announced at the end of March.
Through its investments in 27 infrastructure securities, the fund has exposure to over 1,000 sterling denominated, UK-based infrastructure projects through both debt and equity, with 80 per cent of the portfolio invested in ‘availability’ based assets, such as PFI schools and hospitals, and public sector-subsidised renewables projects.
The fund has provided investors with inflation-linked, uncorrelated returns with lower volatility than the wider equity market whilst delivering attractive absolute performance and steady income. Over the last 12 months the volatility of the MSCI UK was 16.3 per cent versus 5.7 per cent for the fund in respect to the C GBP net accumulation share class. The fund only invests in sterling denominated assets.
By accessing the UK’s listed infrastructure sector via UKIIF, investors have also made significant cost savings as a result of the Fund’s best execution whilst participating in capital raises issued by the underlying holdings. This has saved investors 57 bps by purchasing stock at a discount to the prevailing market price. With the fund charge at 0.75 per cent this equates to a saving of two thirds of the annual management charge.
Stephen West, a partner at Gravis Capital Partners, says: “With the world’s eyes fixed firmly on events across the Atlantic, it is becoming apparent the Trump presidency will struggle to deliver on many of their campaign promises. Whilst this situation plays out we believe we can harness more predictable outcomes by staying closer to home and participating in the UK Government’s increasing commitment to infrastructure expenditure.
“The reflation narrative is also likely to be a key factor influencing returns for the coming year and UKIIF offers both protection from inflation whilst providing a solution for investors seeking consistent, dependable income beyond the traditional asset classes. A significant number of financial professionals, both advisory and discretionary, have recognised this characteristic by contributing to the steady growth in assets under management.
“Although it requires a significant degree of trust to invest in the first year of a fund’s life, our investors understand the dynamics of operating in a sector where the return and income characteristics have barely changed in 20 years as the wider market ebbs and flows. As such we look forward to our next distribution which is expected to bring our cumulative yield above the target 5 per cent mark for the year.”
