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Protecting From the Crash With Private Infrastructure Assets

CEPRES today released an analysis demonstrating how Private (unlisted) Infrastructure can act as a Hedge for Corporate Bonds, whilst significantly outperforming on returns. Using PE.Analyzer to analyze thousands of privately held Infrastructure assets, CEPRES found that...

CEPRES today released an analysis demonstrating how Private (unlisted) Infrastructure can act as a Hedge for Corporate Bonds, whilst significantly outperforming on returns. Using PE.Analyzer to analyze thousands of privately held Infrastructure assets, CEPRES found that since 2002 there was a beta (co-movement) to the US Corporate Bond market of -0.9 and an alpha of 19.5%.

The results were derived from the new PE.Analyzer ‘Alpha Beta Framework’ that uses regression analysis to calculate the risk adjusted return (alpha), together with the correlation (beta) to an underlying market – in this case US Corporate Bonds. This new feature is ground breaking and brings private market investing to the same level as public market trading, because previously it was so challenging to perform this type of analysis based on reliable data.

  • Risk adjusted alpha for Private Infrastructure versus US Corporate Bonds = 19.5%
  • Beta correlation for Private Infrastructure versus US Corporate Bonds = -0.9
  • A beta of -1 is a pure hedge to the comparative market
  • Energy infrastructure adds higher outperformance, but also cyclicity (and hence risk)

Dr. Daniel Schmidt, CEO, CEPRES GmbH says “Infrastructure, as a yielding asset, can be a useful alternative for liability driven fixed income investors, like pensions and insurers seeking higher returns. For those especially worried about volatility and downward pressure on public markets, PE.Analyzer shows that private infrastructure can help hedge risk and enhance a balanced portfolio. We also saw how energy infrastructure increased returns, but at the cost of cyclicity. This may suit alpha driven investors, but introduce some risk that should be analyzed in the context of a complete Asset Allocation. Further variations for other sub-segments and comparison to other markets can all be done in PE.Analyzer.”

Next Finance , November 2016

P.S.

About PE.Analyzer

PE.Analyzer is an online investment decision platform. It encompasses deep analysis of 38,000 private equity funds, deals and assets with a total Enterprise Value of $2.8 trillion USD. It is the only platform providing Technical & Fundamental benchmarking of track records to institutional investors and fund managers to underwrite their decisions and prove their investment strategy.

About CEPRES

CEPRES is an innovative FinTech company helping institutional investors invest in Private Equity with the proficiency of Financial Markets. Investors (LPs) and fund managers (GPs) can interact on a single, confidential platform in complete privacy. LPs gain deep market insights, forecast investment outcomes and enhance due diligence to drive better investment returns. GPs can verify their track record, precisely benchmark their deals and find new sources of capital from around the world. 100’s of institutional investors have conducted due diligence on $1.7 trillion of Buyout, Growth, Venture, Private Debt, Infrastructure and Real Estate funds via the CEPRES platform.

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