Infrastructure fund

An infrastructure fund is a privately offered or publicly listed fund that invests directly or indirectly in infrastructure and associated industries.[1] Examples of direct investments include the purchase of stocks and bonds through public markets, or project finance.[1] Examples of indirect investment includes investment in private infrastructure funds or preexisting, publicly listed infrastructure funds and indexes.[1] Definitions of "infrastructure" vary, but often include power plants, water and waste management systems,[2] transportation systems,[3] communications systems, and oil and gas pipelines. Definitions may also include healthcare and educational facilities.[3]

A 2021 study found that, in part due to the compensation structures and the duration of typical investments, infrastructure funds tend deliver returns worse than investors may assume, and were subject to fluctuations due to economic cycles.[4][5] In February 2023, Bloomberg reported that Preqin predicted some $1.87 trillion would be dedicated to infrastructure investments by 2026.[6]

  1. ^ a b c Bitsch, Florian; Buchner, Axel; Kaserer, Christoph (2010). "Risk, Return and Cash Flow Characteristics of Infrastructure Fund Investments". EIB Papers. 15 (1). Social Science Research Network. Retrieved 25 February 2023.
  2. ^ Marino, Vivian (23 May 2009). "Turning the Infrastructure Into Profits". The New York Times. Retrieved 27 February 2023.
  3. ^ a b Inderst, Georg (3 March 2009). "Pension Fund Investment in Infrastructure". OECD Working Papers on Insurance and Private Pensions (32). CiteSeerX 10.1.1.454.1209. doi:10.2139/ssrn.2389704. S2CID 168153390. SSRN 2389704. Retrieved 25 February 2023.
  4. ^ Simmons, Lee (1 October 2021). "A Bridge Too Far: The Pitfalls of Private Infrastructure Funds". Stanford Graduate School of Business. Stanford Business School. Retrieved 25 February 2023.
  5. ^ Andonov, Aleksandar; Kräussl, Roman; Rauh, Joshua (16 July 2021). "Institutional Investors and Infrastructure Investing". The Review of Financial Studies. 34 (8): 3880–3934. doi:10.1093/rfs/hhab048. hdl:11245.1/2928bf10-e740-47ab-9a41-43c9587c7b5f.
  6. ^ Chan, Vinicy; Tan, Gillian; Nair, Dinesh (24 February 2023). "Blackstone Plans European Infrastructure Fund Initially Targeting Up to $2 Billion". Bloomberg. Retrieved 27 February 2023.