Premier has topped up its holding in the John Laing infrastructure fund in its multi-asset distribution and brought this closed-ended fund in to its conservative growth fund of funds.
The John Laing fund invests in infrastructure assets ranging from roads, transport and street lighting to schools, courts and social housing in the UK, Canada and Europe.
Premier says the only way it can access infrastructure assets directly rather than hold the equities of infrastructure companies is through closed-ended funds. This is because infrastructure assets are illiquid and closed-ended funds, which issue a fixed number of shares, need less liquidity than open-ended funds to meet investor redemptions.
Infrastructure appeals to Premier because it provides a reliable income stream that is backed mainly through the Government, with a degree of inflation protection.
The firm says the underlying assets are capable of yielding 5 to 6 per cent, with total returns of 7 to 8 per cent. It invests only in lower-risk infrastructure assets that are already up and running, not those under construction, which are higher risk.
Investment director of pooled funds David Hambidge says: “We have 2 to 3 per cent in John Laing infrastructure and also own other infrastructure funds. While interest rates are at low levels, we think infrastructure will run and run. The volatility is low and the income is reasonable.