Infrastructure funds have become increasingly important vehicles in financing infrastructure assets, which are typically less sensitive to wider economic changes and the impact of high inflation, and can be considered more of a ‘defensive’ investment. Infrastructure can also offer long-term stable financial returns, making it attractive to certain investors.
This section first sets out the background to infrastructure funds. It then establishes the different types of funds and key distinctions in terminology (such as primary and secondary market investment). Finally, it considers investors in infrastructure funds before touching on associated investment risks.
Although primarily written in the UK context, many UK infrastructure assets have been financed by international investors (notably from Australia and Canada), who have led the way in developing infrastructure funds and investing directly in infrastructure. The UK government is keen to increase levels of investment from UK institutional investors in infrastructure projects to help finance long-term economic growth.