By Emma Wall
The Telegraph
Saturday 26 November 2011

It may not sound the most inspirational and exciting of assets classes, but infrastructure is the hot topic in investment circles right now. And if you think it is the domain of big institutions only you might want to think again, particularly if you are after a sustainable income stream.

This week, the Government suggested that pension funds should be more proactive in helping the economic recovery. As a result plans to incentivise pension funds to invest directly in infrastructure development are being finalised by ministers in a bid to kick start the construction industry and boost pension income.

Earlier this month, the Government announced the end of the Private Finance Initiative (PFI), the system that created public-private partnerships to fund infrastructure development in Britain.

PFI contracts under negotiation in March this year included the construction of infrastructure such as hospitals, schools, tram lines, residential homes and street lighting. …

…The move of populations from rural to urban environments - more than 350m are forecast to move between 2010 and 2015, according to the World Bank - means increased demand for infrastructure….

…But not everyone is in favour of the sector. Alan Steel, who runs his own asset management company, said investors should just stick to income funds.

"I don't understand why you would want to invest in infrastructure when you can get an income from income funds - funds that have managers with a long-term track record and stable yields."

Mr Steel recommended Invesco Perpetual Income, which is yielding 4.4pc, and Neptune Income, paying 4.8pc. For regular income he recommended Jupiter Monthly Income. He advised a defensive spread between UK and global income funds.

"The companies held in M & G's Global Dividend fund have grown their dividends for at least 25 years - a couple have managed it for nearly 40. And at these prices you will get capital appreciation too," he said…

Quote courtesy of The Telegraph
Saturday 26 November 2011