INVESTMENTS & PENSIONS
Reliable income has been stress-tested numerous times over the last five years , but most UK listed infrastructure passed with flying colours . The benefits of holding a sector with long-term , contracted income is attractive for investors looking for fixed income like cash flows with growth potential . The five largest UK infrastructure investment trusts increased their dividend payouts by an average of 3.5 % per annum over the last five years 1 .
Many UK infrastructure sub-sectors continue to benefit from higher inflation , with income exposed to rising prices and in many cases , contractual uplifts directly linked to CPI or RPI . This gives the income streams of many in the sector an attractive differentiator to fixed income . BBGI Infrastructure is an investment trust which manages a portfolio of transport and social infrastructure . Aided by inflationary tailwinds , BBGI has increased its dividend by 6 % in 2023 and is targeting 6 % growth for 2024 2 .
Uncertainty around interest rates continues to create an attractive short-term opportunity . Assura , a social infrastructure company , offers a 7.9 % dividend yield from rents predominately received from GP surgeries , which is directly reimbursed to the NHS . Not only is Assura ’ s dividend yield a significant premium to underlying government bonds , the shares continue to trade at an 18.1 % 3 discount to Net Asset Value .
The macro environment and the uncertainty for the future pathway of interest rates is a contributing factor to discounts seen in the sector but capital performance has seen some encouraging signs of recovery . Since UK government bond yields receded from their peaks in late October 2023 to the end of March 2024 , the average total return for the five largest UK infrastructure investment trusts has been 9.1 % 4 . A recent Refinitiv poll has economists forecasting UK interest rates be cut to 4.5 % by the end of 2024 and 3.5 % by the end of 2025 . Such cuts could create the conditions needed for a further recovery in the sector .
The UK ’ s long-term requirement for modern , energy efficient infrastructure has not changed , with the UK committed to lowering carbon emissions and greening their grids , so renewable energy investment remains a priority . The modernisation of healthcare infrastructure is a challenge for much of the developed world and private capital could play an increasing role in funding this , irrespective of any change in governments .
Political change can be a risk but the priorities of both parties likely to form the next UK government look similar . When budgets are tightened , infrastructure and other capital spending has been an easy target for cuts but given the experiences over the last 15 years , there is greater recognition that persistent investment is a key component to long-term economic growth .
TIME : UK Infrastructure Income invests in a diversified portfolio of high-quality asset-backed infrastructure and renewable energy securities , targeting consistent income returns with capital growth . The fund ’ s portfolio of 26 holdings comprises infrastructure ; renewable energy ; secured lending ; social infrastructure ; digital infrastructure ; and logistics companies .
For more information , please contact questions @ time-investments . com IMPORTANT INFORMATION
TIME Investments is the trading name of Alpha Real Property Investment Advisers LLP . Both TIME Investments and Alpha Real Capital LLP are authorised and regulated by the Financial Conduct Authority .
TIME is the investment manager of TIME : UK Infrastructure Income . There is no guarantee the investment objectives of the Fund will be achieved . The value of investments and the income from them may fall as well as rise because of fluctuations in market , currency or other factors and investors may not get back the original amount invested . Any past performance data cited is not a reliable indicator of future results . TIME accepts no responsibility or liability for the accuracy of sourced third-party data . Specific Fund Information : The underlying investments in TIME : UK Infrastructure Income consists of listed shares and securities . There may be limited diversification across sectors and assets . In addition , the value of investments in equity markets are volatile and the Fund ’ s share price may change due to movements in the prices of the underlying equity and fixed interest security holdings .
Fund Status : The Fund is a UK UCITS within the meaning of the rules contained in the Collective Investment Schemes Sourcebook ( the FCA Regulations ) published by the FCA in their Handbook of rules made under the Financial Services and Markets Act 2000 ( the Act ).
This document does not constitute investment advice and investors are recommended to seek professional advice before investing . Source : 1 Refinitiv as at 18 April 2024 , 2 BBGI as at 18 April 2024 , 3 Numis as at 5 April 2024 , 4 Refinitiv as at 31 March 2024
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