Expert: Andrew Gill, Fund Manager, Time Investments Facilitator: Darshita Gillies
Headlines
- Rising interest rates and bond yields are enhancing the appeal of real asset investments, offering higher yields and stronger total returns compared to traditional fixed-income instruments
- Government priorities in renewable energy and healthcare are creating significant opportunities in the UK infrastructure sector, alongside potential consolidation in investment trusts
- The trend of combining direct property holdings with listed REITs offers investors liquidity, diversification, and stability in a changing property market.
- Real asset investments are increasingly driven by ESG considerations, with strategies focusing on energy efficiency, carbon reduction, and social impact to enhance returns and meet regulatory requirements.
- Logistics, residential, healthcare, and renewable energy infrastructure remain promising sectors, driven by structural trends and the potential for value creation through asset management.
- Adjustments to fee disclosure rules are improving investor sentiment and accessibility in the infrastructure investment space.
Discussion points:
Macroeconomic Environment
Time Investments highlighted how the current macroeconomic backdrop favors real assets, particularly given the higher yields and total returns they provide compared to traditional fixed-income investments. These attributes make real assets an attractive option for diversification and income generation.
Infrastructure Investments
The UK government's commitment to infrastructure development, especially in renewable energy and healthcare, was emphasized as a key driver of growth. The possibility of consolidation among infrastructure investment trusts was discussed, with overlapping strategies likely leading to mergers or acquisitions.
Property Investments and Hybrid Funds
The resilience of larger REITs was highlighted, with these entities well-positioned to adapt to evolving market conditions. The emergence of hybrid property funds, which combine direct property investments with listed REITs, was noted as a strategy to achieve a balance between liquidity and diversification, catering to a range of investor needs.
Sustainability and ESG Considerations
The discussion underscored the growing significance of ESG in shaping real asset investment strategies. Initiatives such as energy efficiency improvements, carbon reduction measures, and social impact projects are not only regulatory imperatives but also enhance asset values and reduce operational costs.
Sector-Specific Trends
Logistics, residential, healthcare, and renewable energy infrastructure were identified as sectors with strong investment potential. Structural drivers like e-commerce growth, aging demographics, and the clean energy transition present compelling opportunities. Value creation through asset management and redevelopment was also highlighted as a strategy for enhancing returns in the property sector.
Regulatory Environment
Recent changes in fee disclosure rules for infrastructure investments were discussed as a positive development, reversing previous barriers to entry for investors. These changes are expected to improve transparency and attract more capital into the sector.
Key takeaways:
- Real assets are well-suited to the current environment of rising rates and yields, offering income stability and growth potential
- Government policies and structural trends make renewable energy and healthcare infrastructure particularly attractive
- Hybrid funds present a promising solution for balancing liquidity and stability in property investments
- Integrating sustainability and social impact considerations is becoming essential for competitive and regulatory success
- Logistics, residential, and healthcare assets offer long-term growth, while redevelopment projects enhance property values
- Positive changes in fee disclosures are likely to enhance investor confidence and sector growth
