Infrastructure is a relatively low-volatility asset class that offers attractive diversification potential and stable, predictable cash flows. Returns in this asset class are typically uncorrelated with the broader financial markets, especially during periods of volatility, and often move in step with inflation.
We approach infrastructure investments with an eye in the potential environmental impacts. Our focus on the railcar industry and other sectors facilitating the shift towards a low-carbon economy.
Our current strategy is centred on rolling stock for the railcar freight industry – an appealing market due to its rapid growth, high demand for stock renewal and relatively limited production capacity.
Cash flow visibility is high in this industry on both the revenue and the cost side due to the long-term contracts and high rates of renewal. This industry is resilient to swings in the business cycle – railcars have a useful life of around 40 years.
Our infrastructure fund managers are industry experts with the skills needed to select high-quality portfolio assets.
We strive to diversify our portfolio in order to deliver stable returns and minimize concentration risk in terms of the type of railcars and the industries and customers served. In addition, we make sure that long-term leasing contracts are in place before railcars are purchased and delivered. Outside financing is used to set up our portfolio, enabling us to benefit from the effects of leverage.