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How to pick the right infrastructure trusts for your risk appetite

Investment trusts are offering exposure to more and more types of infrastructure
How to pick the right infrastructure trusts for your risk appetite
  • As the infrastructure investment trust sector grows, it is important to understand what they invest in and how risky they are 
  • Many trade at premia to NAV so look out for when they offer their shares at a better price in secondary fundraisings

There are around 30 infrastructure investment trusts listed in London, nearly half of which – 13 – have listed in the past three years. Only five have been around for more than a decade, with seven listing in the past 12 months, raising a total of £1.33bn, according to the Association of Investment Companies (AIC). 17 trusts, meanwhile, have issued a secondary fundraising in the past year raising £2.74bn in total. 

Many of these trusts invest in renewable energy assets or social causes, and most of them offer very attractive yields. Wealth managers suggest that you could invest up to 5 per cent of your assets in infrastructure investment trusts, but the sector is becoming increasingly nuanced so it’s important to think carefully about which trust you invest in. And these trusts' popularity means that many of them trade at significant premiums to net asset value (NAV). So if you do invest in them, look out for when they do secondary fundraisings, when their shares can be bought at a better price.   

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