City Research Online

Abstract

Institutional investors expect infrastructure to deliver long-term stable returns but gain exposure to infrastructure predominantly through finite-horizon closed private funds. The cash flows delivered by infrastructure funds display similar volatility and cyclicality as other private equity investments, and their performance similarly depends on quick deal exits. Despite weak risk-adjusted performance and failure to match the supposed characteristics of infrastructure assets, closed funds have received more commitments over time, particularly from public investors. Public institutional investors perform worse than private institutional investors. ESG preferences and regulations explain 25$\%$–40$\%$ of their increased allocation to infrastructure and 30$\%$ of their underperformance.

Publication Type:	Article
Additional Information:	This is an open access article distributed under the terms of the Creative Commons CC BY license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Publisher Keywords:	Portfolio Choice; Investment Decisions; Non-bank Financial Institutions; Financial Instruments; Institutional Investors; Government Policy and Regulation; Infrastructures; Other Public Investment and Capital Stock; State and Local Government: Health; Education; Welfare; Public Pensions
Subjects:	H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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