Apr 05 2017Add to Favorites
Ruth Liew, Bloomberg
Record low yields and negative interest rates are pushing investors from Japan to China into funding infrastructure projects across the globe to bolster ailing income, according to Australia’s biggest listed wealth manager AMP Ltd.
Asian pension funds and insurers are ramping up investments in infrastructure debt around the world including mezzanine offerings as they seek to combat waning returns from traditional fixed income assets, said Kerry Ching, managing director for Asia of the company’s investment arm, AMP Capital Investors. The number of Asian investors in AMP’s infrastructure debt strategies has more than tripled since 2012.
“Because insurance and pension funds have a large chunk of their portfolio in marketable securities and fixed interest which has been extremely volatile for the last couple of years, they’re looking for stability,” she said in an interview in Hong Kong. “Global infrastructure debt was a very successful strategy and there’s stability in the capital value.”
Infrastructure spending plans are drawing greater scrutiny worldwide, including a $1 trillion splurge pledged by President Donald Trump to improve roads, airports and bridges across the U.S. Investors pumped a record $413 billion into infrastructure investments globally last year, according to data provider Preqin. Managers such as Global Infrastructure Partners and Brookfield Asset Management raised unprecedented amounts of funding for their infrastructure strategies in 2016.
AMP has invested more than $3 billion in 56 infrastructure debt assets and raised about $1 billion from investors so far for its third fund in the asset class. The company is “on track” to meet the $2 billion fundraising targets for its latest infrastructure debt strategy, an AMP spokeswoman said in a March 31 email. Such debt funds at the firm target a 10 percent yield on investments, according to the email.
The A$165 billion ($125 billion) manager is seeing increasing interest from Taiwanese and South Korean investors, Ching said. Direct and listed real estate investments including commercial properties in Australia are also increasingly popular among Asian investors thirsty for yield, she said.
“Australian economic conditions have held up relatively well compared with Europe,” she said. “Australian property offers slightly better yield than some of our properties in Hong Kong or Singapore.”
As fund flows increase from Asia, AMP Capital is looking to add to its distribution team in the region, Ching said. “In Hong Kong, we will be hiring a few people this year.”
Segmenting the population by generation is part of popular culture. The generation that came of age in the 1970s is very different to that of the 1980s or 2000s, having grown up with different technology, political and social events.
When the market gets difficult as it is currently it makes you step back and re-assess. Whilst you can do all of the objective commercial assessment in the world, key drivers are ultimately emotional and psychological. Fundamentally it is your "why" that governs your "how". The strength of these emotional and psychological drivers is what gives you the ware withal and grit to know when to hold, fold, walk away or run.
A few years ago I watched an ESPN documentary on NBA and NFL players and this phenomenon how when their careers are up after their moment in the sun, most, 60% and 78% respectively, end up financially destitute. When you think about the fact that most of these professional athletes earn more in just a year of their career than what most of us will earn via our working jobs in a lifetime, yet end up with nothing, it is really a really interesting phenomenon. On the other hand, there is the story of the UPS worker who never earned more than $14,000 a year and invested consistently, amassing a fortune of $70 million over his lifetime, $36m of which he donated to education-based charities to support young people getting a quality education.
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