RSMR: VT Gravis UK Infrastructure Income Fund

UK Income Fund

The Gravis UK Infrastructure Income Fund invests in listed sterling securities in the infrastructure space covering closed ended investment companies, direct equities, fixed income and real estate investment trusts or REITs. As such, the Fund is not constrained by a benchmark in terms of positioning, although it is run to self-imposed limits.


The Fund targets a 5% yield whilst preserving capital with modest capital appreciation and has demonstrated compelling risk return characteristics since launch versus the traditional asset classes. The Fund can be used as an alternative to traditional fixed income and direct UK property funds as a source of income, as well as a diversifier in overall portfolios. RSMR rate the Gravis UK Infrastructure Income Fund as infrastructure is an asset class that is key to the success of an economy and population and covers a variety of areas. The Fund looks to build a portfolio of these assets to deliver investors a yield as well as the potential for capital appreciation and inflation protection. The investment process can be separated into two parts, one qualitative and the other quantitative and Gravis use a combination of the two when assessing an investment opportunity. 


In building the portfolio, the Fund invests in listed sterling securities in the infrastructure space covering investment companies, direct equities, fixed income, and REITs. Investments in the portfolio are selected based on key factors that cover yield, sustainability, inflation, hedging characteristics, sustainable valuation, size, liquidity, and low relative volatility. Gravis do not believe in a short-term approach to investment and specialise in long-term projects invested in assets that the UK will need for many years. The portfolio focuses on availability-based projects, for example, hospitals rather than demand-based projects such as toll roads. A minimum of 75% of the portfolio is supported by UK government backed cash or regulated cash flows, the majority of which are linked to inflation. A minimum of 80% of the portfolio is invested in completed or operational assets with 100% allocation to sterling denominated securities.


The Gravis UK Infrastructure Income Fund provides investors with an alternative to traditional fixed income or direct UK property funds, especially for those seeking an income. Alternatively, the fund offers diversification benefits when combined with traditional asset classes or could be used for investors who wish to invest in the underlying listed infrastructure holdings but cannot do so directly via an offshore bond wrapper. The underlying characteristics of the portfolio are such that when the wider market is experiencing a period of volatility, the fund will typically be less affected. Much of the underlying cash flows in the fund is linked to inflation and would typically perform favourably in inflationary environment. The Fund could experience underperformance in periods of sustained market and earnings growth, as well as in periods of political risk within the underlying sector.


Interest rate risk could also impact returns in an aggressive rate rising environment, especially in the UK and as seen during the current rate hike cycle. An area of risk for this type of strategy is linked to government sentiment and policy. However, these risks are somewhat mitigated by holding a diverse portfolio of varying projects in this sector, rather than holding one listed investment company where the risk is magnified.

Important Information


The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction.  


The information should not be considered as a recommendation, invitation or inducement that any investor should subscribe for, dispose of or purchase any securities or enter into any other transaction with the VT Gravis Funds ICVC, or any other Fund affiliated with the Investment Adviser.  The merits and suitability of any investment action in relation to securities should be considered carefully and involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of such securities.     


Although high standards have been used in the preparation of the information, analysis, views and projections presented, no responsibility or liability whatsoever can be accepted by the Investment Adviser for any errors, omissions, misstatements, loss or damage resultant from any use of, reliance on, or reference to the contents. The views and opinions contained herein may not necessarily represent views expressed or reflected in other Gravis communications, strategies or funds and are subject to change.  


The VT Gravis Funds ICVC is a UCITS scheme and an umbrella company for the purposes of the OEIC Regulations.


Past performance is no guarantee of future performance.


Gravis Advisory Limited (Registered Number: 09910124) is an Appointed Representative of Valu-Trac Investment Management Ltd, which is authorised and regulated by the Financial Conduct Authority.  Gravis Advisory Limited’s principal place of business is: 24 Savile Row, London, W1S 2ES. 

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