VT Gravis UK Infrastructure Income

VT 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 a less volatile and higher-yielding area of the UK economy.

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

Valu-Trac (VT) is the investment manager of this fund, while Will Argent, who is employed by Gravis, is the fund advisor. Will makes the investment decisions and Valu-Trac executes the transactions.

Will Argent joined Gravis in 2017, having spent 12 years working as an analyst within the private wealth management sector. His responsibilities have included the analysis and recommendation of direct equities and closed-end investment vehicles for client portfolios, setting asset allocation and strategy, and the management of open-ended funds. Will graduated with a degree in Mathematics from the University of Exeter and has passed all three levels of the CFA Program. He was awarded the CFA charter in 2009.

Will Argent_ Gravis

I love a good nights sleep, so it’s no coincidence I love investing in the infrastructure sector.

Will ArgentFund manager

Investment process

VT 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 an sell the securities when required).

Around two thirds of the VT 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.

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.

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.

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