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| 1 minute read

...So what defines a Real Asset? Are air conditioning units 'Infrastructure'?

Whether you are a leading annuities fund, looking to do all you can to optimise the illiquidity premium on the asset side of your balance sheet (meaning keener pricing for pension buy-outs), a sovereign or private wealth investor in search of protected cashflows, a CDI structurer, or even one of a new wave of real asset funds with liquid asset allocations in the retail market, it's certainly the case that portfolio managers and CIO's are more willing than ever to look at new ideas and new underlyings in order to gain an advantage on their peers and competitors.

So who decides where your investing parameters begin and end, when the pressure is on to find innovative answers to often complex problems, in a highly competitive market?  

A case in point might be that of air conditioning leasing:  These assets could be highly cashflow generative, inflation linked and (arguably) decorrelated.  Would they fit an energy or utilities portfolio?  What about barriers to entry - surely a key criterion to Real Asset investment? As asset management companies increasingly market these products with reference to performance metrics, with 'Alternative Credit' funds slowly replacing those defined by the sector in which they invest; and as regulations encourage Real Money investors to follow a similar line of thinking, where does an asset-hungry investor draw the line? 'Infrastructure Investor' takes up the case...

We’ve been here before and we’ll almost certainly be here again (and again): as the asset class evolves, what exactly falls into the infrastructure bracket? Following Brookfield and iCON’s recent investments in two Canadian companies providing heating and air conditioning rental and maintenance services, among others, the time is right to revisit this question. So, let’s get stuck in: is the leasing of heating and cooling systems to predominantly residential customers an infrastructure investment? For Brookfield infrastructure boss Sam Pollock, the answer is ‘yes’...

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executive search, recruitment, infrastructure, pensions, alm, solvency 2, life insurance, annuities, insurance solutions

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