Invest­ments in Infras­truc­ture Facili­ties

Private Market Invest­ments: A New Approach to Wealth Manage­ment

After years of excep­tio­nally low interest rates and in light of persi­stent infla­tion risks, investors face a chall­enge: Bonds, which tradi­tio­nally make up a signi­fi­cant portion of portfo­lios, barely generate enough returns to ensure capital preser­va­tion when infla­tion, taxes, and costs are taken into account—especially in Switz­er­land. Not least for this reason, we have decided to take a cautious first step toward private market invest­ments.

What are private market invest­ments?

Unlike publicly traded stocks and bonds, private market invest­ments are invest­ments in unlisted stocks and bonds. For example, with SpaceX’s recent initial public offering (IPO), a private market invest­ment became a publicly traded stock.

The lines between listed and unlisted invest­ments are becoming incre­a­singly blurred. While private markets were once considered illiquid, diffi­cult to access, and lacking in trans­pa­rency, new fund struc­tures, a maturing secon­dary market, and improved data availa­bi­lity are now incre­a­singly opening up access to these markets for indivi­dual investors as well.

Infras­truc­ture: Stabi­lity in Uncer­tain Times

Private markets include, among other things, infras­truc­ture invest­ments. Private infras­truc­ture encom­passes invest­ments in critical infras­truc­ture such as trans­por­ta­tion networks, energy genera­tion, and commu­ni­ca­tions networks. Since these assets form the founda­tion of the economy and society, they offer parti­cular advan­tages: stable cash flows from long-term contracts, natural protec­tion against infla­tion through price-indexed returns, lower volati­lity than stocks due to their lower sensi­ti­vity to economic cycles, and signi­fi­cantly higher returns than bonds. In addition, infras­truc­ture invest­ments exhibit low corre­la­tion with stocks and bonds, making them parti­cu­larly attrac­tive as a portfolio comple­ment.

Long-Term Growth Poten­tial

Accor­ding to the 2017 Global Infras­truc­ture Outlook, the need for infras­truc­ture invest­ment is expected to double between 2015 and 2040. At the time of publi­ca­tion, Oxford Econo­mics calcu­lated a total funding gap of USD 15 trillion compared to existing finan­cing plans. In the meantime, driven by two megatrends, that estimate is likely to be even higher: Digita­lization is driving demand for data centers, 5G networks, and fiber-optic infras­truc­ture. The energy transi­tion requires massive invest­ments in renewable energy, power grids, and sustainable techno­lo­gies.

How to Invest?

In recent years, various provi­ders of private market invest­ments have launched fund solutions for retail investors. These typically offer monthly valua­tions as well as limited quarterly redemp­tion options.

A specia­lized asset manage­ment mandate, such as the one offered by Tareno, simpli­fies access to such invest­ments and often makes it more cost-effec­tive. This is due to the pooling of invest­ment capital, access to insti­tu­tional share classes, better negotia­ting terms, and the profes­sional selec­tion and ongoing monito­ring of the funds.

Since our first private market invest­ment five years ago, we have expanded our portfolio to include four private market funds, two of which focus on infras­truc­ture. Our most recent addition is the Black­s­tone Infras­truc­ture Strate­gies ELTIF.

We chose this second infras­truc­ture fund because Black­s­tone is one of the world’s leading infras­truc­ture investors and has a long-standing, impres­sive track record. As one of the largest players in this sector, Black­s­tone has access to attrac­tive transac­tions and exten­sive experi­ence in imple­men­ting and develo­ping complex infras­truc­ture projects.

The fund is diver­si­fied across the sectors of digital infras­truc­ture, energy, and trans­por­ta­tion. This focus enables targeted exposure to struc­tural growth themes such as digita­lization and the energy transi­tion.

After the first three months, our clients can look forward to a net return of 13% in EUR, which is well above the annual target return of 10%.

Our selec­tion of private market funds now comple­ments our portfo­lios with an alloca­tion of up to 13% in selected invest­ment solutions, thereby signi­fi­cantly enhan­cing the stabi­lity, diver­si­fi­ca­tion, and long-term return poten­tial of our client portfo­lios.

You can find more infor­ma­tion about our invest­ment solutions here:

About Our Invest­ment Solutions