10 YEARS OF PA: The birth of infrastructure funds, to property in turmoil

By James Carthew, research director, QuotedData

Added 12th October 2016

The investment company sector has changed considerably over the past ten years, as back in October 2006 we were still enjoying the dying days of the credit boom.

10 YEARS OF PA: The birth of infrastructure funds, to property in turmoil

Funds being launched at that time reflected the appeal of risker assets. Trusts such as South African Property Opportunities, Origo Partners and Cambium Global Timberland were launched into this environment.

Many more staid and sensible funds began life then too including International Public Partnerships and 3i Infrastructure.

The growth in importance of the infrastructure sector, which didn’t really exist before 2006, has been a major change over the past decade and these funds have been popular with investors for most of their lives. 


This period also saw the expansion of the hedge fund sector with the launch of funds such as Third Point Offshore, BH Macro and Boussard & Gavuadan.

It wasn’t long though before this sector was under pressure from investors to hand back cash. Too many funds generated lacklustre returns and the hedge funds were one of a number of investment company sub-sectors to suffer in the credit crunch.

Many private equity funds were found to have overcommitted themselves and had to take some tough decisions to shore up their balance sheets.

The long-term damage this did to the sector’s reputation may be partly responsible for the attacks on Electra and SVG Capital today.  

Hardest hit of course were the highly leveraged property funds. Almost all the funds specialising in overseas property ran into problems for example and only relatively recently have we seen new launches with the likes of Phoenix Spree Deutschland, Taliesin property and Schroder European Real Estate.

The less-leveraged big UK property funds proved to be more durable however and, when central banks slashed rates in the wake of the crisis, the yields offered by the property sector proved tempting enough to allow this sector to expand.

The recent experience of investors in open-ended property funds has underscored the appeal of closed-ended property funds in times of stress.

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