Infrastructure Investment and the Emerging Role of Institutional Investors: The Case of Pension Funds and Sovereign Wealth Funds

Purpose Amongst the alternative property sectors, student accommodation has recently become an important institutionalised property sector for pension funds and sovereign wealth funds in the global property landscape, particularly in the UK. The purpose of this paper is to assess the significance, risk-adjusted performance and portfolio diversification benefits of student accommodation in a UK property and mixed-asset portfolio over 2011–2017. Drivers and risk factors for the ongoing development of the student accommodation sector are also identified. The question of student accommodation being a proxy for residential property exposure by institutional investors is also assessed. Design/methodology/approach Using annual total returns, the risk-adjusted performance and portfolio diversification benefits of UK student accommodation over 2011–2017 is assessed. Asset allocation diagrams are used to assess the role of student accommodation in a UK property portfolio and in a UK mixed-asset portfolio for a range of property investor types. Findings UK student accommodation delivered superior risk-adjusted returns compared to UK property, stocks and REITs over 2011–2017, with portfolio diversification benefits. Importantly, this sees UK student accommodation as strongly contributing to the UK property and mixed-asset portfolios across the entire portfolio risk spectrum and validating the property industry perspective of student accommodation being low risk and providing diversification benefits. Student accommodation is also not seen to be a proxy for residential exposure by institutional investors. Practical implications Student accommodation is an alternative property sector that has become increasingly institutionalised in recent years. The results highlight the important role of student accommodation in a UK property portfolio and in a UK mixed-asset portfolio. The strong risk-adjusted performance of UK student accommodation compared to UK property, stocks and REITs over this timeframe sees UK student accommodation contributing to the mixed-asset portfolio across the entire portfolio risk spectrum. This is particularly important, as many investors (e.g. pension funds, sovereign wealth funds) now see student accommodation as an important property sector in their overall portfolio. Originality/value This paper is the first published empirical research analysis of the risk-adjusted performance of UK student accommodation, and the role of student accommodation in a UK property portfolio and in a UK mixed-asset portfolio. This research enables empirically validated, more informed and practical property investment decision making regarding the strategic role of student accommodation as an alternative property sector in a portfolio.

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The role of foreign investment in U.S. infrastructure: opportunities and challenges ahead

Economics and Business Letters ◽

10.17811/ebl.9.3.2020.157-166 ◽

2020 ◽

Vol 9 (3) ◽

pp. 157-166

Author(s):

Iordanis Petsas ◽

Sofia M Vidalis

Keyword(s):

Infrastructure Investment ◽

Public Infrastructure ◽

Sovereign Wealth Funds ◽

The Public ◽

New Construction ◽

Useful Life ◽

American Society ◽

The U.S

The U.S. infrastructure has been issued a grade of D+ from the American Society of Civil Engineers because of the low funding for new construction, maintenance, and repair. It is now reaching the end of its useful life and cost estimates have reached as high as $3.6-trillion. The public infrastructure investment is at 2.4% of GDP, which is half of what it was 50-years ago. The U.S. has explored new ways to finance its infrastructure because of funding uncertainty. Investments such as, pensions, foreign investments, and sovereign wealth funds, manage trillions in assets and are forecasted to grow. This paper presents an overview in infrastructure funding and identifies possible approaches in addressing long-term financial needs with foreign capital partnership.

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Money Talks: Institutional Investors and Voice in Contract

Theoretical Inquiries in Law ◽

10.1515/til-2019-0020 ◽

2019 ◽

Vol 20 (2) ◽

pp. 511-535

Author(s):

Roy Kreitner

Keyword(s):

Institutional Investors ◽

Building Blocks ◽

Pension Funds ◽

Market Behavior ◽

Market Participation ◽

Institutional Investment ◽

Fair Degree

Abstract Contracts are the building blocks of markets, where participation is typically understood through choice: to buy or not to buy, and if so, from whom? In other words, contract choices allow participation by exit, with little need for discussion. However, in some instances markets may be open to a fair degree of voice. Market behavior is not always a take it or leave it endeavor, and market participation does not always entail the kind of passivity associated with the role of the price taker. At least when some contract parties put their minds to it, markets may retreat from the mechanics of pure preference satisfaction and interact with a realm of reasoned deliberation, where some market reasons are significantly public-minded. This essay explores the potential of contracts to become a locus of deliberative participation in the context of institutional investment (primarily by pension funds) and investors’ pursuit of commitments to nonfinancial goals.

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The Efficiency of Mandatory Pension Funds: Case of Croatia

South East European Journal of Economics and Business ◽

10.2478/jeb-2019-0015 ◽

2019 ◽

Vol 14 (2) ◽

pp. 82-94

Author(s):

Bojana Olgić Draženović ◽

Sabina Hodžić ◽

Dario Maradin

Keyword(s):

Data Envelopment Analysis ◽

Technical Efficiency ◽

Capital Markets ◽

Institutional Investors ◽

Pension Funds ◽

Main Role ◽

Data Envelopment

Abstract The aim of this paper is to examine performance of pension funds in Croatia, or more precisely, to measure the technical efficiency of mandatory pension funds. The main role of the pension funds is to collect and invest the money contributed by the employer or the employee during working years until retirement. Therefore, development of pension funds as institutional investors is especially important for capital markets as well as for the whole economy. By applying the methodology of data envelopment analysis on a sample of 12 DMUs, i.e. four mandatory pension funds divided into three categories (A, B or C) for 2015-2018 period, we provide further evidence on their efficiency level. The results have shown very small differences among relative inefficient pension funds.

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