Institutional Investors and Infrastructure Investing

Pension fund asset allocation and liability discount rates

Aleksandar Andonov, Roman Kräussl, Joshua Rauh and Stijn Van Nieuwerburgh

The Review of Financial Studies, 2021, vol. 34, issue 8, 3880-3934

Abstract: Institutional investors expect infrastructure to deliver long-term stable returns but gain exposure to infrastructure predominantly through finite-horizon closed private funds. The cash flows delivered by infrastructure funds display similar volatility and cyclicality as other private equity investments, and their performance similarly depends on quick deal exits. Despite weak risk-adjusted performance and failure to match the supposed characteristics of infrastructure assets, closed funds have received more commitments over time, particularly from public investors. Public institutional investors perform worse than private institutional investors. ESG preferences and regulations explain 25–40 of their increased allocation to infrastructure and 30 of their underperformance.

JEL-codes: G11 G23 G28 H54 H75 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (10)

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