The market value of listed infrastructure funds on the London Stock Exchange has risen from £1.4bn to £4.9bn since the end of 2008 due to increasing numbers of funds gaining listing shares and existing funds raising fresh capital. The trend is likely to continue as the government highlights new infrastructure projects to drive economic recovery.

Over the last year, four of the largest publicly quoted infrastructure funds including GCP Infrastructure, International Public Partnerships (INPP), John Laing Infrastructure (JLIF) and HICL infrastructure (HICL) have performed comparably to the FTSE 100. In the year to 31 March, the FTSE 100 infrastructure funds experienced total returns of 15%, compared to 13% in the INPP, 14% in the HICL, 13% in the JLIF and 16% in the GCP.

The funds have also only suffered 60% of the volatility shown by the wider stock market and dividends have been increased.

According to Investec Wealth & Investment (IW&I) it has increased its own clients’ overall exposure to infrastructure funds by over £40m in the last year and by over £60m over two years.

IW&I’s chief investment officer Chris Hills said: “With government bonds yields and base rates remaining at rock bottom, infrastructure is providing a welcome source of income for many investors and we expect the sector to continue to perform solidly over 2013. However, investors are likely to be better off by investing in a secondary issue at close to net asset value rather than buying existing shares in the market at a premium.”

The company did however warn that investors need to scrutinise the choice of funds carefully to understand where they stand on the risk spectrum.

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