Pension Fund Investment in Social Infrastructure

In this publication, we extend our response to the issues relating to pension fund investment in social infrastructure.

Author(s) :

Frederic Blanc-Brude

Research Director at EDHEC Risk Institute–Asia.

Presentation :

Social infrastructure investments have by design the characteristics that pension funds find attractive in a liability-driven investment context: long-term contracts with steady and predictable inflationlinked income, high operating margins and high risk-adjusted return. Social infrastructure also corresponds to the bulk of the assets procured under the PFI and a model that has successfully been exported to the rest of Europe, and beyond to Asia and the Americas. Moreover, social infrastructure investment may address some of the shortcomings of the general infrastructure investment case, which we outlined in our original response. ‘Economic’ infrastructure in particular tends to be too lumpy and fragmented for investors to contemplate holding a representative basket of investable infrastructure assets. Thus there is no available passive infrastructure investment strategy that a pension fund can follow by holding a highly diversified portfolio. Actual investments are likely to include exposures to the class and to firm-specific risk.
Pdf
Pension Fund Investment in Social Infrastructure...
(1.63 MB)
Type : Publication EDHEC
Date : le 24/02/2012
Extra information : For more information, please contact EDHEC Research and Development Department [ research@drd.edhec.edu ]
Research Cluster : Finance

See Also

OTHERWISE#4 is online !
- 23-03-2017
One of EDHEC’s hallmarks is “being where it is not expected to be” and OTHERWISE...
Support the new generation of students
- 20-03-2017
Support the new generation of students Act for EDHEC! Many Alumni in the UK have...
Emmanuel Metais named new Dean of EDHEC Business School
- 17-03-2017
EDHEC Business School is pleased to announce Emmanuel Métais’s appointment as the new...
MSc in Data Analytics & Digital Business: a new master designed to bridge the gap between data specialists and decision makers
- 13-03-2017
EDHEC Business School is pleased to announce the launch of a new MSc in Data Analytics...