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VT Gravis Digital Infrastructure Income

The Digital Infrastructure Income strategy turns 3!

3 years of innovation: leading investment in the next generation of real estate

Designed to invest in companies which own the physical assets vital to the digital economy, the VT Gravis Digital Infrastructure Income Fund marked its third anniversary on 31 May 2024.

The Fund has returned 0.35% since launch, making it the 7th best performing fund in the 50+-strong Investment Association Property Other sector*. Over the three years, the Fund has also produced a reliable and growing income: the current trailing 12-month dividend yield is 3.0% and has grown 20.5% since June 2022**.

Earlier this year, Robeco and Gravis have collaborated to launch a Luxembourg based UCITS version of the digital infrastructure income strategy. Managed by the Gravis team and distributed globally by Robeco, the new fund is a sub-fund of the Robeco Capital Growth Funds SICAV and Article-8 classified under the Sustainable Finance Disclosure Regulation (SFDR). You can read more about the Fund here.

* Source: FE fundinfo, total return in GBP, 31 May 2021 to 31 May 2024.
** C Income share class. Trailing 12-month dividends 28 March 2024 compared to 30 June 2022.

Digital Infrastructure: the enabler of the fourth industrial revolution

In the minute it takes you to read the first few lines of this article, there will have been 2.4 million Google searches, 213 million emails sent, 16 million texts received, and 694,000 hours of YouTube videos streamed - all within just 60 seconds*. The digital age has arrived.

The so-called ‘Fourth Industrial Revolution,’ in which digital technologies have changed the way we work, live and play, is well underway. And this evolution has happened startlingly quickly. It took Uber 70 months to get 100 million active users. By the time TikTok arrived it took just 9 months to achieve the same number and ChatGPT just 2 months**.

*Source: wyzowl.com, internetlivestats.com, mackeeper.com, sellcell.com
**Source: time.com

Sub-sector 1: Data centres

One of the most exciting areas of digital Infrastructure is data centres. Data centres are the physical facilities that house computer systems and their related hardware equipment needed to store, process and disseminate the data we all use on a daily basis. Every tap of our keyboards and screens leaves a digital footprint and the more activity we engage in, the greater the requirement for server storage. Even with the compression of memory capacity into ever smaller chips, data centres are growing in scale and number worldwide and with generative artificial intelligence booming, demand is only going to increase.

Sub-sector 2: Telecommunication towers

The second type of digital infrastructure that Gravis invests in is communication towers – the key piece of infrastructure that sits between data centres and the consumer so that we can use our mobile phones and computers and play our online games. Communication towers support antennas for telecommunications, wireless internet and broadcasting. Fast and seamless connectivity is all that matters to the user, so a network of towers with excess capacity is required to ensure interruptions are kept to a minimum.

Sub-sector 3: Logistics

The third area of digital infrastructure that Gravis invests in is logistics assets. These fall into two categories: e-commerce fulfilment centres such as the Amazon big box warehouses; and urban logistics spaces that enable same day and next day delivery. Online shopping offers three important things demanded by modern lifestyles: competitive costs, choice and convenience. To meet customer demand for next-day and same-day e-commerce retailers have focused their efforts on developing high-tech and well-located fulfilment solutions. However, instead of owning property, the e-commerce businesses are often the tenant, leasing space from a Real Estate Investment Trust (REIT) landlord.

Sub-sector 4: Networks

The fourth area that Gravis invests in is networks – the fibre optic cables joining everything together to enable digital communications. They deliver ultra-high speed internet access and data centre colocation space and are vital for the future of telecommunications and internet connectivity because they can support the increasing demands of digital technologies and, through internet service providers, offer reliable and fast internet services.

Matthew Norris: Is it time to rethink property funds?

In this episode of IFA Talk, hosts Brandon Russell and Sue Whitbread from IFA Magazine discuss property funds with Matthew Norris, adviser to the VT Gravis Digital Infrastructure Income Fund. Matt highlights the evolving property sector, emphasising the importance of thematic investing. He notes the decline of traditional retail and regional office spaces, whilst highlighting the focus on sub-sectors like data centres, telecommunication towers, logistics assets and networks that support digitalisation. The conversation highlights the benefits of investing in real estate investment trusts (REITs), citing their structure, growth potential and diversification. Listen below for the full conversation.

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