1 Comment 1 Commentby Sonia Speedy
The New Zealand Superannuation Fund recently announced it is investing up to $100 million into the Morrison & Co Public Infrastructure Partnership (Pip) fund - the first NZ fund to invest alongside local, regional and central government. HRL Morrison, a NZ-based specialist infrastructure investment manager, has said it is also looking into offering a retail feeder fund, although no decision has yet been made on this.
Financial Focus principal Murray Weatherston says infrastructure is an asset class that many people want to get into.
"There is lots of literature about infrastructure as being a critical asset class for people to invest in," he says.
While any "sensible" new product should be welcomed, he said the "proof of the pudding" would be in whether or not people actually invested in such an offering.
Newton Ross Private Wealth Management principal Mike Newton adds that infrastructure is an important component of alternative assets.
"For people who are looking for domestic infrastructure exposure, it could well make sense," he says.
The Morrison PIP fund will develop facilities such as schools, social housing, community medical centres and prisons, but will not be involved with delivering the public services that take place inside them. It will have an initial investment capacity of $500 million, with investments structured as concession agreements and the Pip fund paid by a government partner for financing, building and managing the facilities over a fixed term, typically 25-35 years. After this time the facilities will be transferred to public ownership.
In the UK and Australia similar stable operating Pip investments return around 8% - 12%, while those with more delivery risk return in the mid teens.
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Do the names Babcock & Brown and Allco and retail infratstructure funds mean nothing. Look at Macquarie Bank, dumping the listed trusts.
Beware the fees. This is a dash for cash by trust external managers. External managers don't work.
Need Proof - look at the fee pit/feast that Infratil is. The same people work for all the boxes, fees for this and that fly round, the unit holder copps it...
As for the reatil feeder fund. Expect the only one that feeds to be the manager - bless them......