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Trends in Large Pension Fund Investment in Infrastructure

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  • Raffaele Della Croce

    (OECD)

Abstract

Favourable conditions such as the growth of pension fund assets, privatisation trends and changing regulations have increased the interest of institutional investors in infrastructure investment. However, data on pension fund investment in infrastructure is limited. National statistical agencies do not currently collect separate data on these investments, and the different modes available to investors to gain exposure to infrastructure means that information is buried under different headings. This paper is based on a recent survey of some of the largest pension funds across different regions, accounting for over USD 7 trillion of assets under management. We look at how much these investors have allocated to infrastructure, what is considered as infrastructure, where it fits in the total portfolio allocation, what approaches and forms of investment have been taken, what are recent trends in relation to infrastructure and asset allocation, regulation and green investment. A better understanding of these issues is necessary from a policy perspective in order to be able to attract institutional investors to the infrastructure sector. Tendances dans les investissements des grands fonds de pension dans les infrasctructures Des conditions propices, comme la croissance de l’actif des fonds de pension, l’orientation des privatisations et l’évolution de la réglementation, ont attisé l’intérêt des investisseurs institutionnels en faveur des investissements dans les infrastructures. Pour le moment, les données disponibles à ce sujet sont toutefois limitées. Les instituts de la statistique des différents pays ne compilent pas, pour l’heure, de données distinctes sur cette catégorie d’investissements, ces informations étant ventilées et dissimulées sous différents intitulés en raison de la diversité des vecteurs par lesquels les investisseurs peuvent se doter d’une telle exposition. Le présent rapport se fonde sur une enquête récente consacrée à certains des plus grands fonds de pension des différentes régions du monde, dont l’actif total sous gestion s’élève à plus de 7 000 milliards USD. Y sont analysés : la part allouée aux infrastructures par les investisseurs ; ce qui est considéré comme une infrastructure, la place de ces investissements dans les allocations globales de portefeuille, les approches retenues pour les réaliser et les formes qu’ils prennent, les récentes tendances dans le domaine des infrastructures et en matière d’allocation d’actifs, la réglementation et les investissements verts. Du point de vue des pouvoirs publics, il est indispensable d’acquérir une meilleure compréhension de ces questions pour pouvoir attirer les investisseurs institutionnels vers ce secteur.

Suggested Citation

  • Raffaele Della Croce, 2012. "Trends in Large Pension Fund Investment in Infrastructure," OECD Working Papers on Finance, Insurance and Private Pensions 29, OECD Publishing.
  • Handle: RePEc:oec:dafaad:29-en
    DOI: 10.1787/5k8xd1p1p7r3-en
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    Citations

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    Cited by:

    1. Senderski, Marcin, 2014. "Assessing the strictness of portfolio-related regulation of pension funds: Rethinking the definition of prudent," MPRA Paper 56610, University Library of Munich, Germany.
    2. Leviäkangas, Pekka & Ojala, Lauri & Töyli, Juuso, 2016. "An integrated ecosystem model for understanding infrastructure PPPs," Utilities Policy, Elsevier, vol. 42(C), pages 10-19.
    3. Aleksandar Andonov & Roman Kräussl & Joshua Rauh & Stijn Van Nieuwerburgh, 2021. "Institutional Investors and Infrastructure Investing [Pension fund asset allocation and liability discount rates]," The Review of Financial Studies, Society for Financial Studies, vol. 34(8), pages 3880-3934.
    4. Aleksandar Andonov & Roman Kräussl & Joshua Rauh, 2018. "The Subsidy to Infrastructure as an Asset Class," NBER Working Papers 25045, National Bureau of Economic Research, Inc.
    5. Christensen, Pernille H. & Robinson, Spenser J. & Simons, Robert A., 2018. "The influence of energy considerations on decision making by institutional real estate owners in the U.S," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 275-284.
    6. Lieve Fransen & Gino del Bufalo & Edoardo Reviglio, 2018. "Boosting Investment in Social Infrastructure in Europe," European Economy - Discussion Papers 074, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Surbhi Gupta & Anil Kumar Sharma, 2022. "Evolution of infrastructure as an asset class: a systematic literature review and thematic analysis," Journal of Asset Management, Palgrave Macmillan, vol. 23(3), pages 173-200, May.
    8. Blyth, William & McCarthy, Rory & Gross, Robert, 2015. "Financing the UK power sector: Is the money available?," Energy Policy, Elsevier, vol. 87(C), pages 607-622.
    9. Ben Ammar, Semir & Eling, Martin, 2015. "Common risk factors of infrastructure investments," Energy Economics, Elsevier, vol. 49(C), pages 257-273.
    10. Sophia Chong & Emily Poole, 2013. "Financing Infrastructure: A Spectrum of Country Approaches," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 65-76, September.
    11. Colin Turner, 2018. "The governance of polycentric national infrastructure systems: Evidence from the UK National Infrastructure Plan," Environment and Planning C, , vol. 36(3), pages 513-529, May.
    12. Melusi Mpofu & Mabutho Sibanda, 2015. "Private Equity Capital in a Less Developed Economy: Evidence, Issues and Perspectives," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(5), pages 17-29, October.
    13. Cadman, Richard & Curram, Stephan & Exelby, David, 2021. "The Determinants of Investment in Very High Capacity Networks: A System Dynamics Approach," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238013, International Telecommunications Society (ITS).

    More about this item

    Keywords

    actifs alternatifs; allocation d'actifs; alternative assets; asset allocation; barriers; contraintes réglementaires; diversification; diversification; financement privé; infrastructure; infrastructure; listed securities; obstacle; pensions; pensions; private finance; regulatory constraints; rendement; returns; risk; risque; titres cotés en bourse;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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