Infrastructure for income

At a time when generating an income has become so challenging, we are delighted to highlight two investment opportunities, both targeting a regular yield of 5% per annum paid quarterly* – infrastructure funds.

Why invest in infrastructure?

Infrastructure assets provide core services and facilities – from large-scale projects such as power networks, railways and roads to smaller, but equally essential, structures such as GP surgeries. Importantly, they may generate cash flows that are not dependent on wider economic conditions. Earnings are typically resilient and predictable, and can offer protection from inflation.

Legg Mason RARE Global Infrastructure Income                                                                               Chelsea Risk Rating**: 5

This fund gives investors access to infrastructure by investing in a selection of the 500 global listed infrastructure stocks. The team of 13 specialist infrastructure professionals places a heavy emphasis on certainty of future revenues, giving each stock an infrastructure exposure score and an infrastructure quality score. Industry, company and regulatory analysis are key, as are meetings with companies, regulators, suppliers and customers.

Chelsea discount
The first £1.5 million of investment will go into a share class with a permanently discounted annual management charge (AMC) of 0.40%. Investments thereafter will have an AMC of 0.75%. The 4% entry charge is waived fully for clients of Chelsea.

Chelsea view
Having specialist knowledge in this space, which is heavily dependent on regulation, is an important advantage. The fund has a solid investment process and offers an excellent yield. It is well diversified by geography and it also offers investors some protection against inflation.

Click on the links for more information: Legg Mason RARE Global Infrastructure factsheet and KIID. PLEASE CALL US ON 020 7384 7300 IF YOU WOULD LIKE TO INVEST IN THIS FUND.

VT UK Infrastructure Income                                                                                                                Chelsea Risk Rating**: 4

This is a UK infrastructure fund run by a specialist infrastructure team. With the UK government encouraging more infrastructure funding from the private sector, new opportunities for investors are emerging.

About two thirds of the fund invests in investment trusts exposed to different types of infrastructure. These include public social infrastructure (hospitals and schools), private social infrastructure (GP surgeries and student accommodation) and renewable energy infrastructure (solar power and wind turbines). The fund has a smaller exposure to direct infrastructure equities (currently 12%), which it breaks down into private economic infrastructure (water, ports, airports and power) and infrastructure contractors (builders of infrastructure projects). The fund also holds some direct infrastructure fixed income debt (currently 8%). The AMC is 0.75%.

Chelsea view
This is a well diversified fund, which offers an excellent way to invest in the growing need for infrastructure in the UK. This fund also has a very good yield and we expect it to continue to be less volatile than equities in the wider UK stock market.

Click on the links for more information: VT UK Infrastructure Income factsheet and KIID