Infrastructure: a new dimension of real estate? An asset allocation analysis

Finkenzeller, Konrad; Dechant, Tobias; Schäfers, Wolfgang

doi:10.1108/14635781011058875

Cited by 63 publications

(62 citation statements)

References 13 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…They find higher Sharpe ratios than the market and low but growing correlations over time with market returns. Finkenzeller et al (2010) find similar results. The work of Newell and Peng (2008) finds that in the USA, infrastructure (ex-utilities) underperforms stocks and bonds over the period from 2000 to 2006, while utilities outperform the market.…”

Section: Literature Reviewsupporting

confidence: 78%

See 1 more Smart Citation

Searching for a listed infrastructure asset class using mean–variance spanning

Blanc-Brude¹,

Whittaker²,

Wilde

2017

Financ Mark Portf Manag

View full text Add to dashboard Cite

This study examines the portfolio-diversification benefits of listed infrastructure stocks. We employ three different definitions of listed infrastructure and tests of mean-variance spanning. The evidence shows that viewing infrastructure as an asset class is misguided. We employ different schemes of infrastructure asset selection (both traditional asset classes and factor exposures) and discover that they do not provide portfolio-diversification benefits to existing asset allocation choices. We also find that defining and selecting infrastructure investments by business model as opposed to industrial sectors can reveal a very different investment profile, albeit one that improves the mean-variance efficient frontier since the global financial crisis. This study provides new insights into defining and benchmarking infrastructure equity investments in general, as well as into the extent to which public markets can be used to proxy the risk-adjusted performance of privately held infrastructure investments.

show abstract

Section: Literature Reviewsupporting

confidence: 78%

“…Other studies on the performance of infrastructure indices by Peng and Newell (2007), Finkenzeller et al (2010), Dechant and Finkenzeller (2013), and Oyedele et al (2014) also report potential diversification benefits. However, none examine whether these are statistically or economically significant.…”

Section: Ad Hoc Listed Infrastructure Indicesmentioning

confidence: 99%

Searching for a listed infrastructure asset class using mean–variance spanning

Blanc-Brude¹,

Whittaker²,

Wilde

2017

Financ Mark Portf Manag

View full text Add to dashboard Cite

show abstract

“…Given the time of the publication, the paper only covers the downside period of the financial crisis, leaving out the sharp recovery of listed asset prices after Q2 2009. Finkenzeller et al (2010) analyze similar data over a longer time between Q4 1994 and Q1 2009, including the impact of the financial crisis. However, the authors make adjustments to get "desmoothed" and "unlevered" returns for better comparability with transaction-based indices of listed assets (removing a gearing level of 60 percent).…”

Section: Australian Unlisted Fundsmentioning

confidence: 99%

Infrastructure as an Asset Class

Weber¹,

Staub-Bisang²,

Wilhelm³

2016

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Infrastructure as an asset class 1. Infrastructure assets: Demand, definition, and investment characteristics Terms of use: Documents inInvesting in public infrastructure has become popular with institutional and private investors in recent years. A growing number of specialist products were launched by the financial industry to satisfy the demand for infrastructure as a new asset class with a number of attractive and distinctive investment characteristics.Can infrastructure investments live up to the promise? Despite the action seen in recent years, the field is still very much under-researched. This is surprising, given the political, economic, financial, social, and also cultural, relevance of infrastructure, and the potential contribution of private finance to longterm investment.We still know very little, both in theory and in practice. Private investors' experience with infrastructure funds is rarely longer than four to five years, and is shaped by the boom-bust-environment in financial markets. There are a number of issues that confuse investors and researchers alike.Research was initially undertaken primarily by product providers (see Inderst 2009 for an overview of the earlier literature). Over the last one or two years, a number of new books and articles have been published in this field. However, data are still very limited in quantity and quality, making empirical work difficult. More surprisingly, there is hardly any theoretical work done on the subject.This article sheds some light on the question whether infrastructure-related financial assets are distinct enough to form an asset class on their own. It discusses the empirical literature on return, risk and other characteristics of infrastructure-related financial assets and presents new empirical results on the issue.The remainder of this section gives some background on the demand for infrastructure assets, their definition and investment characteristics. Section 2 introduces investment vehicles and provides facts and figures for the growing investment volumes. Section 3 looks at investors' asset allocation to infrastructure. Section 4 discusses the risk-return profile and specific risks. Section 5 reviews the evidence available on the historical performance of infrastructure investments. Section 6 undertakes a new analysis of the net returns of unlisted infrastructure funds on a global scale. Section 7 discusses the diversification potential and optimal portfolio allocation. Section 8 pre...

show abstract

“…While earlier research has covered the performance profile of infrastructure across Australia (Finkenzeller et al, 2010;Peng and Newell, 2007;Newell et al 2011); China (Newell et al, 2009); US (Newell and Peng, 2008) and India (Singhal et al 2011), even at a larger scale covering European infrastructure (RREEF Research, 2010;Newell and Peng, 2007); and global infrastructure (RREEF Research (2009), there is a dearth of infrastructure performance analysis for the UK infrastructure market. Considering the significance position of UK within the infrastructure investment landscape, as a developed infrastructure market which reflects a leading role within the European and global infrastructure space, hence, the focus of this paper is on the UK infrastructure market with emphasis on listed investment, showcasing the performance of UK listed infrastructure and its role in a mixed asset portfolio over a unique financial timeframe 2001-2010.…”

Section: Hospitals)mentioning

confidence: 99%

Performance and Significance of United Kingdom Listed Infrastructure in Mixed-Asset Portfolio

Oyedele¹,

Stevenson²,

Krystalogianni³

2013

Proceedings of the 20th Annual European Real Estate Society Conference - Vienna, Austria

View full text Add to dashboard Cite

Purpose of Paper-This paper examines the performance of UK listed infrastructure over a unique investment period covering the global financial crisis and investigates the significance of UK infrastructure in a multi-asset portfolio. The analysis reveals the level of correlation of UK infrastructure with other major assets classes and substantiates the potential diversification benefits of including UK infrastructure within a mixed asset portfolio. Research Implication-Using the monthly return indices over the ten year period, UK listed infrastructure investment was found to play a consistently significant role in the optimality of mixed-asset portfolios. However, the diversification benefits were more return enhancing than risk reducing, offering investors a platform for matching investment objectives with expectations resulting from a better understanding of the characteristics of UK listed infrastructure investments. Research Design andOriginality-As investors seek better understanding of the performance of infrastructure across the globe, with most previous studies focusing on Australia, US and China, the paper makes significant contribution to the body of knowledge by focusing on UK, a promising investment space for infrastructure industry. Also, given the debate surrounding the emergence of infrastructure as a separate asset class, the paper particularly projects the potential benefits of investing in UK listed infrastructure, offering investors a distinctive platform to launch into a vibrant asset class.

show abstract

Infrastructure: a new dimension of real estate? An asset allocation analysis

Cited by 63 publications

References 13 publications

Searching for a listed infrastructure asset class using mean–variance spanning

Searching for a listed infrastructure asset class using mean–variance spanning

Infrastructure as an Asset Class

Performance and Significance of United Kingdom Listed Infrastructure in Mixed-Asset Portfolio

Contact Info

Product

Resources

About