The US remains one of the most developed regions for infrastructure investment, with growing numbers of institutional investors moving into the market. Part of this influx are private wealth investors, who allocate funds to the asset class in order to benefit from the increased portfolio diversification and the asset class’s relatively stable long-term yield.
Preqin’s Infrastructure Online currently tracks 115 private wealth investors located in the US that invest in the infrastructure asset class. The majority (57%) of private wealth firms are wealth managers, while single-(24%) and multi-family offices (19%) make up the remainder.
On average, single-family offices (SFO) possess smaller assets under management (AUM), at $615mn, than their private wealth peers, making infrastructure’s larger investment sizes and longer timeframe for realization a less suitable option for this group. SFOs generally opt for unlisted funds, with 94% of firms currently utilizing this route to market, while direct (6%) and listed (3%) vehicles remain less favoured options.
Unsurprisingly, multi-family offices (MFO) have a comparatively higher average AUM ($5.1bn) than SFOs, although similar proportions (96%) currently allocate capital to infrastructure through unlisted funds. Where SFOs and MFOs differ is in the proportions investing through direct and listed infrastructure: 24% of MFOs have exposure through listed vehicles, while 20% invest directly in the asset class.
With mean assets under advisement of $20bn, wealth managers have an investment capacity which is more suited to investing in infrastructure. Similar to pension funds, wealth managers can put larger sums of money to work for longer periods of time and worry less about short-term limitations and requirements.