UBS: Infra investment cycle may have peaked

UBS Asset Management has said there are warning signs to suggest that we may now be late in the infrastructure investment cycle.

While acknowledging that it can be difficult to predict whether the market has reached peak valuations, the organization's report into the sector suggests that managers are adopting riskier strategies and valuations look expensive by historical standards.

However, the report on the infrastructure equity cycle also pointed out that some of the uplift in valuations can be justified by a lower rates environment.

“Additionally infrastructure still provides a significant premium over risk-free rates and looks attractive relative to other private asset classes,” it continued.

The report concluded it remains difficult to pinpoint exactly where in the cycle the market currently sits, but added that if there is a market correction, “income strategies would outperform capital-driven strategies as the income from stable infrastructure assets will continue delivering returns for investors”.

To read the full report, click here.