As more investors consider allocations to unlisted infrastructure, the need to bring the asset class into the mainstream of risk management, asset allocation and prudential regulation is increasing rapidly. Recent advances in data collection and asset pricing techniques now enable the evolution of fair market prices to be estimated.
The choice of performance test benchmark of Superannuation funds’ investments in infrastructure
In this contribution to the exposure draft consultation on the “Your Future, Your Super” package, we do not comment on the general approach taken by the regulator to benchmark MySuper products but solely focus on the choice of benchmark for the unlisted infrastructure asset class. We propose abandoning the use of listed equity indices to proxy investments made in the unlisted infrastructure equity asset class in the proposed performance tests of MySuper products. We argue that recent advances in data collection and innovation in asset pricing provide a robust and academically validated alternative to the currently proposed benchmark. This listed equity index (the FTSE Developed Core Index) is wholly inadequate because it is not representative of the universe or of the risks to which Superannuation products are exposed when investing in unlisted infrastructure. Instead, the infra300, an index built to be representative of the unlisted infrastructure universe, constitutes a robust and fair alternative that can benefit plan members and managers alike as well as meeting the prudential objectives of the regulator.
Towards a Scientific Approach to ESG for Infrastructure Investors. A Publication of the EDHEC Infrastructure Institute
New research finds that ESG reporting schemes for infrastructure investors are not focused on measuring risks despite upcoming SFDR requirements to do so. A new publication of the EDHEC/Natixis Research Chair on ESG and infrastructure investment, “Towards a Scientific Approach to ESG for Infrastructure” reviews and maps major existing ESG schemes used by investors and finds that they are primarily … Read More
Towards a Scientific Approach to ESG for Infrastructure Investors
We explore the role of ESG issues in an investment context, namely how institutional investors should incorporate ESG elements into the financial management of their portfolios. A growing number of investors are pursuing ESG objectives to directly improve environmental and social outcomes.
Strategic Asset Allocation with Unlisted Infrastructure. EDHECinfra Use Case Series
New Data Highlights the Role of Infrastructure in Multi-Asset Portfolios Latest benchmark data shows that unlisted infrastructure equity and debt could play a significant role in institutional portfolios with as much as 10% of the global portfolio. A new EDHECinfra paper entitled “Strategic Asset Allocation with Unlisted Infrastructure – Better Data for Sensible Results” shows the importance of benchmark selection … Read More
Strategic Asset Allocation with Unlisted Infrastructure: Better data for sensible results
We show how the traditional indexes used as proxies for unlisted infrastructure fail to represent the qualities of the asset class and how investors can carry out a simple asset allocation exercise to calculate the optimal allocation they should be making to unlisted infrastructure based on their individual portfolio needs.