In the continued high interest rate environment, more investors are turning to hybrid funds that include infrastructure investments as a strategic approach to diversify portfolios and provide steady income streams. Technology advancements demand an increasingly robust power grid and more data centers. As the energy demand grows and traditional energy source prices rise, renewable energy becomes more attractive, particularly due to an increased focus on environmental, social and governance (ESG) investing. Meanwhile, new opportunities and incentives from the Inflation Reduction Act and the CHIPS in Science Act have also contributed to the already growing industry.
Hybrid funds provide a one-stop solution for diversification, saving investors the effort of creating and managing a diversified portfolio themselves, relying on a fund manager to make decisions. Infrastructure assets generate consistent, predictable cash flows, which can be leveraged to provide regular distributions to investors—an attractive feature to investors seeking stable, long-term returns. An evergreen or open-ended fund structure can be better suited for certain infrastructure assets with long-term contracts, such as utilities or renewables.
However, including infrastructure investments in a hybrid fund presents operational challenges stemming from the unique characteristics and complexity of infrastructure assets. The regulatory requirements of infrastructure investments vary significantly across regions and sectors, making compliance complex and time-consuming. Managing infrastructure assets also requires specialized knowledge and expertise in sectors such as energy, transportation and utilities. Reporting requirements for various entities within the fund structure, cybersecurity and risk management can also become a heavy cost burden when maintained in-house.
Many funds choose to partner with a fund administrator who can provide robust technology and integrated solutions, as well as a knowledgeable team to navigate reporting and compliance requirements. Choosing a global service provider that has experience with diverse asset classes and fund structures is critical.
SS&C offers the tools to help maximize efficiencies and meet your financial reporting requirements. Our experienced team has the knowledge and capabilities to support your infrastructure fund administration needs. As a leading innovator in technology-powered solutions and operational services for the global investment management industry, our expertise covers the full range of private market investments, including infrastructure, hedge, venture, real estate and private equity funds. Our technology solutions connect multiple platforms, allowing you to efficiently collect, analyze and distribute data.
To learn more about how the right technology-driven solutions can help you streamline infrastructure fund operations, view our "10 Benefits of Outsourcing to a Fund Administrator" infographic.
