Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by HICL Infrastructure. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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HICL Infrastructure (HICL) offers the prospect of steady, long-term returns with a link to inflation. It focusses on the highest-quality infrastructure assets that exhibit the most coveted investment characteristics and which sit at the lower end of the risk spectrum. As we highlight in the Dividend section, HICL aims to pay an attractive and stable level of dividend, which yields 5.1% at the current share price. The last few years have been amongst the most challenging in HICL’s life so far, but the recent interim results showed that HICL continues to deliver in a resilient manner.

HICL’s investment mandate allows for up to 20% of the portfolio to be invested in demand-based assets which not only tend to have higher linkages to inflation, but also have an element of linkage to GDP. It is these assets that were negatively affected by pandemic travel restrictions, but as the interim results highlighted, they are continuing to recover in line with, or ahead of, management expectations. Otherwise, the financial year so far has been a relatively eventful period for HICL in terms of investments, with the managers having announced four significant acquisitions totalling £616m. The effect of these new investments has been to extend the weighted average life of the portfolio from 30 years, as at 31/03/2022, to 33 years, as at 30/09/2022.

HICL’s returns have a linkage with inflation of 0.8, meaning that for a 1% increase in inflation for all future periods, the overall returns of the portfolio will increase by c. 0.8%. As the interim results highlighted, inflation is starting to drive returns within the portfolio, with the total NAV returns of 6.7% over the six months to 30/09/2022 significantly exceeding the discount rate, principally because of higher inflation.

Kepler View

The managers have been very active this year and HICL has a healthy, committed pipeline of investments. Aside from broadening the exposure of the portfolio, another positive effect from this activity is that the weighted average life of the portfolio has been extended from 30 years, as at 31/03/2022, to 33 years, as at 30/09/2022. In our view, this further boosts the resilience of the portfolio and shareholder value.

With a dividend target of 8.25p for the current financial year, as well as for the financial year ending 31 March 2024, HICL offers a prospective yield on the current share price of 5.1%. Cash cover of the dividend was negatively impacted by COVID lockdowns but as these assets recover, cash cover has continued to improve, with the managers reporting cash cover of 1.03 times for the six months to 30/09/2022.

As at 30/09/2022, HICL had net cash of £79m, representing 2.4% of net assets. HICL had a total of £713m available on its revolving credit facility (RCF), giving it plenty of firepower for the committed investments of £583.5m. In the interim results’ presentation, the managers commented that the RCF has since been partly drawn down to fund the Aotearoa Towers’ transaction. Depending on equity market conditions, this may suggest that HICL will look to raise further equity capital if market conditions improve.

In our view, HICL offers an uncorrelated return stream over the medium and long term which should have enduring appeal for long-term investors. The trust will be a direct beneficiary, in total return-terms, of any increase in long-term expectations for inflation, so investors may see the current discount to NAV of 2% as a potentially interesting entry point.


  • Lower-risk, institutional-quality infrastructure assets within a liquid vehicle that has scale
  • Steady and resilient yield, with dividend that is cash-covered
  • Returns are positively correlated to inflation


  • Demand-based assets do provide an element of correlation to economic activity
  • Capital is at risk if the manager is unable to continue to extend the weighted average asset life
  • Dividend cover is relatively low at 1.03x on a cash basis
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2024 Kepler Alternative Income Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for alternative income... Find out more

Fund History

10 Jul 2024 Things can only get better
Discounts are yawning but markets are thawing and boards are on the offensive; Labour might not be the only thing making a comeback this year...
03 Jul 2024 Fund Analysis
HICL’s increased dividend target comes amidst other positive signs…
24 Jun 2024 The rate cycle must soon benefit infrastructure and renewables
Spreads remain elevated, yet we may be soon approaching a turn in the cycle…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
20 Dec 2023 Fund Analysis
Green shoots are appearing for HICL’s dividend cover…
04 Oct 2023 Get real
The prospect of attractive real returns seems to be ignored by the market…
09 Aug 2023 Should I stay, or should I go?
Re-appraising the invitation to the bond party…
07 Jul 2023 Fund Analysis
HICL’s portfolio continues to evolve, building foundations for dividend growth…
03 May 2023 Alt-right or alt-wrong?
Infrastructure and renewables have moved from alternative to mainstream assets - what could be next..?
22 Mar 2023 Good vibrations
We identify some sectors with structural discounts we think could close over time…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
16 Dec 2022 Fund Analysis
HICL’s portfolio continues to broaden but the shares have been de-rated...
16 Jun 2022 Fund Analysis
HICL is in a prime position to benefit from higher inflation….
11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
04 May 2022 Time to change the record
We ask whether equities can still offer meaningful diversification or whether investors need to turn to alternatives…
09 Mar 2022 Private markets: A closer look at infrastructure and renewables
We examine the £27bn listed Infrastructure and Renewable Energy Infrastructure sectors…
21 Dec 2021 Fund Analysis
Cash covered dividend and link to inflation underlines HICL’s appeal…
01 Dec 2021 How to protect your portfolio from inflation
We highlight trusts which could appeal in an environment where 'transient' inflation is here to stay...
16 Jun 2021 Fund Analysis
Covered dividend target this year means HICL looks less expensive than peers…
12 May 2021 Riders on the storm
We look at the yields in the alternatives space and how they have been affected by the pandemic…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
09 Sep 2020 Time to switch horses?
We look at what returns are likely from equity markets in the coming decade and identify which alternatives could offer similar or greater returns for lower levels of risk…
13 Aug 2020 Fund Analysis
HICL offer institutional quality infrastructure assets, delivering an attractive income...
23 Apr 2020 Sucker punch
Two of our analysts debate the merits of equity income and alternative income trusts at this point in time...
29 Oct 2019 Fund Analysis
Institutional quality infrastructure assets, delivering an attractive income...
09 Oct 2019 Bond proxy?
As a replacement or complement for longer duration bonds, listed alternative income funds look an interesting, well… alternative..
06 Mar 2019 Stairway to heaven
Our research shows that reinvesting the income generated by alternative assets could add a significant boost to long-term portfolio performance…
14 Feb 2019 Fund Analysis
Predictable cashflows, uncorrelated to the economic cycle
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