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The Gravis UK Infrastructure Income Fund invests in listed sterling securities in the infrastructure space, covering closed-end 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 after charges 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 as a source of income as well as a diversifier in overall portfolios.

Infrastructure is an asset class that is key to the success of an economy and population and covers a variety of areas. The Gravis UK Infrastructure Income 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 the investment manager uses a combination of the two when assessing an investment opportunity. In building the portfolio, the fund invests listed sterling securities in the infrastructure space, covering investment companies, direct equities, fixed income, and REITs.

Investments in the portfolio are selected based some key factors that cover yield sustainability, inflation hedging characteristics, sustainable valuation, size and liquidity, and low relative volatility.

Gravis do not believe in a short-term approach to investment and specialise in long-term projects, investing 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 the 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, what could be used for investors who wish to invest in the underlying listed infrastructure holdings but cannot do so directly via an offshore bond. The underlying characteristics of the portfolio are such that when the wider market is experiencing periods of volatility, the Fund will typically be less affected.

Much of the underlying cash flows in the Fund is linked to inflation and will typically perform favourably in an inflationary environment. The Fund could experience underperformance in periods of sustained market and earnings growth, as well in periods of political risk with the underlying sector. Interest rate risk could also impact returns in an aggressive rate rising environment, especially in the UK. Turning to political risk, under the current Labor Government, the focus of the Secretary of State for Energy and Security in Net Zero is on priority areas of energy transition in the UK, which should assist areas such as onshore and offshore wind. In addition, the UK National Wealth Fund and its assistance in decarbonisation of industry should be supportive to the sector.