How Satisfied are LPs with the Current Infrastructure Marketplace? - September 2013

by Stephen Yates

  • 25 Sep 2013
  • INF

When asked if the returns generated by infrastructure investments had lived up to expectations, 93% of investors recently surveyed felt their infrastructure portfolios had either met or exceeded expectations over the past 12 months. This demonstrates that infrastructure investments have largely performed positively despite uncertain economic conditions, and have contributed well to overall portfolio performance. It is not surprising that a significant 74% of investors surveyed reported no change and remained largely positive towards the infrastructure space. A further 13% of investors felt their confidence in the asset class had increased showing that infrastructure performance within portfolios is living up to expected standards and, for some, exceeding them.

Despite the overall positive response regarding infrastructure portfolio performance, there are still concerns that investor and manager interests are not properly aligned. Seventy-three percent of investors believed that management fees were an area where alignment of interests could be improved, 70% wanted to see an improvement in the structure of performance fees, 43% felt both manager commitment to the fund and the amount paid in performance fees was an area that needed to see improved alignment of interests, while 41% felt hurdle rates were an area where manager and investor interests lacked.

Despite this continued concern, 46% of investors surveyed felt that their overall perception of the infrastructure industry was positive. A further forty-six percent felt that their outlook for the industry would be negative at present. Only 8% of respondents harboured negative perceptions about the industry. It is clear that while the infrastructure industry contains certain issues that investors feel need be addressed, the overall sentiment behind the asset class remains neutral to positive. Further work can be done to address these investor concerns and bolster investor perceptions towards the asset class, especially given the promising data regarding infrastructure investment performance within LPs' portfolios.

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