Trustnet Magazine 59 February 2020 | Page 60

In the back [ STOCKPICKER ] 60 / 61 The catalysts for this investor appetite can be found in the last financial crisis and the global monetary policy response that followed, driving interest rates to structural lows TB Amati UK Smaller Companies’ David Stevenson names three stocks he is using to benefit from the growing appetite for alternative assets Considering the alternatives to structural lows, as well as in the regulatory pressures imposed on life companies and pension funds to match long-term liabilities with long- duration assets. Alternative assets can include specialist property (such as self-storage or healthcare), renewables, infrastructure and financial instruments such as royalties, debt and leases. There are many ways to play this theme in the UK market. Below are three examples used in the TB Amati UK Smaller Companies fund. A noteworthy feature of capital markets over the last decade has been growing institutional demand for “alternative” assets. These are assets offering long-term visible returns, with a low correlation to equities and bonds. The catalysts for this investor appetite can be found in the last financial crisis and the global monetary policy response that followed, driving interest rates ICG is a global asset manager with a history of providing mezzanine debt to private equity investors; this has broad- ened its product range to senior debt, infrastruc- ture debt and specialist private equity funds. In an environment of falling TRUSTNET interest rates, ICG’s high- yielding investments have been in strong institu- tional demand and it has progressed from investing its own balance sheet to raising third-party funds, with a scaling of capacity. This has also been fuelled by the growth in the pri- vate equity sector and its deal activity. Watkin Jones is a contract builder of purpose-built student accommodation (PBSA) and build-to-rent (BTR) assets. PBSA is well estab- lished in the UK, provid- ing modern accommo- dation to domestic and international students. Watkin Jones targets high-occupancy city-cen- tre developments, which generate durable yields for institutional inves- tors – to which it also provides a property-man- agement service. BTR is a similar bespoke build for institutions but is at an earlier stage in the UK compared with the US. erational shift in UK hous- ing, where there is unmet Grainger is the UK’s demand for quality rental largest listed residen- properties. Grainger de- tial landlord. It has been velops, acquires and man- migrating its business ages PRS properties and from legacy regulated competes with institution- tenancy properties, which al investors for newbuild are sold once vacated, to assets. It recently estab- private rented sector (PRS) lished a joint venture with properties. The company TFL to create PRS homes represents a play on a gen- close to tube stations. trustnet.com