Managed by Stephen West and Stephen Ellis, the VT UK Infrastructure Income Fund will aim to deliver a distributed yield of 5% per annum by investing in the UK’s listed infrastructure sector.
According to Ellis, the decision to launch the fund was driven by client demand for an open-ended vehicle providing a similar cautious, uncorrelated type of return to the firm’s flagship closed-ended fund.
“There is a very significant subset of the investor universe that we are seeking to address that cannot or does not like to invest in closed ended funds,” Ellis explained, for example, it is the only fund within the sector that qualifies for inclusion within offshore bond wrappers.
Asked about the growth within the infrastructure space in the past few years, and the challenges posed to investors by its new-found popularity, Ellis admits that yields have definitely been compressed in the past few years. But, he added: “Infrastructure is a very big beast. There is a large range of assets that can be viewed as falling within the infrastructure investment remit and it continues to grow.”
Ellis is also quick to highlight the difference between the VT UK Infrastructure Income Fund and other open-ended infrastructure funds. Other such funds tend, he says, to have a large exposure to emerging markets which brings with it both currency and political risk.
Liquid universe
According to GCP, the potential investment universe for the fund includes around 50 stocks, but at launch it will have investments in around 22 to 25 stocks, falling into a number of sub-sectors: public social infrastructure, such as hospitals and schools, private social infrastructure like GP surgeries, private economic infrastructure, such as ports, airports and power generators, renewable energy, infrastructure contractors and the infrastructure debt market.
“The fund is able to invest up to 15% in infrastructure bonds issued in sterling, but the focus will be on the equity market,” Ellis said.
Adding: “The average market cap of the proposed holdings is about £3.5bn so there is a lot of underlying liquidity within the market.”
A UCITS IV compliant UK OEIC, the fund has an OCF of 0.75% for the clean share class and 0.65% for the institutional share class.
GCP Advisory is the adviser to the fund, Valu-Trac Investment Management Limited will act as Authorised Corporate Director and Highland Capital Partners will be responsible for sales and marketing.
The offer period commences on 18 January ahead of the launch on 25 January.
