TM Gravis UK Infrastructure Income
TM Gravis UK Infrastructure Income invests mainly in investment trusts exposed to different types of UK infrastructure; from railways and roads to GP surgeries and solar power. It has an income target of 5% per annum, which is distributed quarterly, and offers exposure to a less volatile and higher-yielding area of the UK economy.
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Our Opinion
We have been fans of this fund since its launch in January 2016. It is a well diversified fund, and offers an excellent way to invest in the growing need for infrastructure in the UK. It has a very good yield, which will be attractive to income investors at a time when generating a decent level of income remains challenging. It also offers investors some protection against rising inflation. We like the fact that it can invest in infrastructure debt, as well as equities.
Fund Manager
Will Argent, Lead Manager
William Argent, Director, Infrastructure Securities. Will is responsible for the TM Gravis UK Infrastructure Income Fund and TM Gravis Clean Energy Income Fund. He joined Gravis in 2017, having spent 12 years working as an equity analyst and portfolio manager within the private client wealth management industry. Will has significant experience investing in global capital markets and he maintains a specialist focus on the listed infrastructure and real asset sectors. Will graduated with a degree in Mathematics from the University of Exeter. He has passed all three levels of the CFA Program and was awarded the CFA charter in 2009.
Risk
Investing in closed-ended vehicles, such as investment companies, can lead to issues if they are trading on high premiums to their net asset value. As the majority of projects are government backed, political risk is a factor that should be considered. The fund may also lag during times of aggressively rising interest rates. However, due to the nature of the underlying holdings, it should be less volatile that the wider UK stock market.
Company Description
Gravis is a specialist infrastructure advisory firm, which was formed in 2008. The company manages in excess of c£3 billion in a range of listed investment companies and UCITs with assets in the US, Australia, Europe & the UK. The Gravis team has worked together over many years and invests in the funds, so aligning its interests with those of its investors.
Talking Factsheet
TM Gravis UK Infrastructure IncomeWill Argent
Quote from the Fund Manager
I love a good night's sleep, so it’s no coincidence I love investing in the infrastructure sector.
Will ArgentLead Manager
Will ArgentInvestment process
TM Gravis UK Infrastructure Income was the first fund to offer investors access to the UK-listed infrastructure sector through an open-ended structure. It invests in investment companies, direct equities, fixed income and Real Estate Investment Trusts.
Will looks for companies based on a number of key factors: yield sustainability, inflation-hedging characteristics, sustainable valuation and low relative volatility. Holdings must also have a certain level of liquidity (the ability to buy and sell the securities when required).
Around two thirds of the TM Gravis UK Infrastructure Income fund invests in investment trusts exposed to different types of infrastructure. These include public social infrastructure (hospitals and schools), private social infrastructure (GP surgeries and student accommodation) and renewable energy infrastructure (solar power and wind turbines).
The fund will have a minimum of 22 holdings, and the maximum holding size is 9.5%. While this may seem very concentrated, investors should note that the fund will have exposure to around 1,000 separate underlying projects. Turnover is generally no greater than 20% per annum. Investments chosen are generally underpinned by obligations of UK central and local government and always by long-term predictable, contracted income.
Risk
Investing in closed-ended vehicles, such as investment companies, can lead to issues if they are trading on high premiums to their net asset value. As the majority of projects are government backed, political risk is a factor that should be considered. The fund may also lag during times of aggressively rising interest rates. However, due to the nature of the underlying holdings, it should be less volatile that the wider UK stock market.
ESG
ESG - Limited
Gravis has a check list of ESG-related issues that it looks at from a broad level. This is primarily for information purposes rather than to preclude investment and, beyond this, the fund does not score ESG factors to use within its stock selection process. The firm is building a Voting & Engagement policy, however, which is designed to formalise the engagement process with its holdings.
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