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

Abstract

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.