Type: Offshore Oeic
Aim: Income and growth by investing in UK infrastructure through projects funded by the Private Finance Initiative
Minimum investment: Lump sum £25,000
Investment split: 100% in infrastructure projects funded by PFI
Place of registration: Jersey
Charges: Initial up to 4%, annual 0.9%
Commission: Initial up to 2.5%
The GCP infrastructure fund invests in the Government’s private finance initiative projects such as hospitals and schools. PFI provides the Government with a way of funding such projects without needing to use immediate public sector capital. The public sector contracts project companies to design, build and manage the projects. Management contracts typically last 30 years and during this time, the public authority can use the school, hospital or other asset in return for a series of payments, which are often linked to inflation.
Capital Trust Financial Management director Bruce MacFarlane says: “The GCP infrastructure fund is an expert fund and due to its classification, it will be deemed as unsuitable for perhaps the majority of many IFAs’ clients.”
MacFarlane believes that although the fund is classified as being only suitable for the more sophisticated investor, it is still likely to be attractive to many advisers and their clients as it provides a unique opportunity to invest in projects procured under the Private Finance Initiative.
“These projects will aim to provide investors with long-dated quasi government cashflow at very substantial margins over government debt. The fund aims to produce an 8 per cent a year return when fully invested net of fees and expenses, and provides the IFA with a useful diversification tool for some of their more sophisticated clients who are looking for a higher yield asset for their investment portfolios,” he says.
Turning to the less attractive features of the fund MacFarlane says: “There is little I dislike about the product. For a high-yielding fund, I would prefer to see distributions paid on a more regular basis. “ He also feels that it is unfortunate that as an expert or sophisticated investors fund, the unique qualities of this fund will not be accessible to many potential investors.
Scanning the market for possible competitors MacFarlane says: “The product is unique and competition will be from more traditional high yielding equity and bond funds.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average