Income yield and capital appreciation have long been hallmarks of infrastructure investments, but the search for yield has become more challenging as demand for infrastructure investments drives up prices and lowers return potential.
What is considered a good yield varies significantly across regions and is ultimately linked to a mix of factors, including an investor’s portfolio objective; local economic conditions and monetary policy settings; and more recently, outlook on inflation, points out Nick Cleary, partner and head of North American debt business with Vantage Infrastructure in New York City. For example, in Japan and Europe a good annual yield can be 2 percent to 3 percent, whereas in North America investors consider a minimum above 5 percent and often 7 percent to 8 percent.
An acceptable yield will, of course, vary depending on the type of fund and the risk profile of the portfolio, adds George Emerson, senior investment officer with Seattle City Employee
