While infrastructure assets still carry risk, as all investments do, it is generally lower risk than high-growth assets such as shares, which can be strongly influenced by investor sentiment and economic cycles. Many infrastructure assets provide a steady income – income which is often linked to inflation and sometimes protected by government regulations., demand for social infrastructure properties is increasing in Australia.
The fund, with around $2 billion in assets spread across 376 properties, opens up an asset class which traditionally has only been available to large institutional investors. “This makes unlisted infrastructure very unique compared to other unlisted investments such as property, private equity or credit investments, which typically have much lower investment thresholds.”To solve this access problem, the Core Infrastructure Fund combines individual wholesale investors’ funds to invest in some of Australia’s biggest social infrastructure assets. The minimum investment is $50,000 and the average wholesale investment is around $250,000.
Social infrastructure under its definition delivers a return profile similar to that of a state government-backed bond, and includes assets such as health, education, corrections, community services and essential services facilities. The Core Infrastructure Fund invests in other managed infrastructure funds, including the Global Diversified Infrastructure Fund managed by First Sentier, the Brookfield Super-Core Infrastructure Partners and AMP Capital’s Community Infrastructure Fund. Fees on the Core Infrastructure Fund are typically lower than investors would pay if they invested directly in those other funds.
The forecast internal rate of return for the SDA Fund is 9.5 per cent annually. The rental income of the fund is backed by the federal government’s National Disability Insurance Scheme.