yourself, whether it’s direct or finding a new manager, you can capture that extra value.
If you are small, you do not have that expertise and have to rely on consultants and advisers. There is also the benefit of diver- sification, so you have a trade-off for the higher costs. When you net these costs off it is still worth it, but it is a hurdle for many smaller pension schemes to clear. Collins: Diversification is harder to achieve than in the public space where there are index funds. Often the only practical way for small pension funds to access private markets is via fiduci- ary managers.
It is worth the effort, but there is danger of concentration risk for small schemes if they only appoint one or two managers.
There is a drive to get private capital in infrastructure. Is that happening?
20 May 2022 portfolio institutional roundtable: Private markets
Aylott: There is an increased appetite for infrastructure from our clients and capital is flowing into that space. Sumpster: The Australians and Canadians came in swathes to European infrastructure in the late noughties. Since then, many more international infrastructure investors have entered the market.
The private market for infrastructure is thriving. We are seeing a lot of assets changing hands and attractive returns and invest- ments being made on both sides. We still struggle with the old public-private partnership model here in the UK but are enthused on the next style of public/private programme. We have had positive discussions with government representa- tives, focussed on the UK’s levelling up agenda [internationally Build Back Better] and Solvency II, providing the flexibility to crowd us into infrastructure and to make investors excited about the environment ahead.
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