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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’s (HICL) investments are unlisted and offer the prospect of steady, long term returns with a link to inflation. It aims to provide a sustainable and steady income stream with a low correlation to changes in GDP or equity markets from a portfolio of core infrastructure assets. Since launch, NAV total returns of 9% per annum have been achieved (to 31/03/2022), comfortably outpacing UK equity markets over the same period and over the past five years.

Aside from the high income that HICL offers to shareholders (dividend yield of 4.7%, see Dividend section), one of the key selling points for investors has been the link with inflation. With inflation is becoming increasingly prevalent, following the publication of HICL’s final results. In the Portfolio section we examine the different elements of the trust’s portfolio, in the context of an era of higher inflation.

HICL’s managers have stated that in their view, the trust has “strong inflation correlation”, effectively a direct contractual link to project revenues, although as we discuss not necessarily directly linked to immediate cashflows. They have stated that, in a scenario where inflation was 1% higher than currently assumed in all future periods, HICL’s annual exected total (gross, before fee) returns would increase from 6.6% to 7.4%. If short term inflation expectations are exceeded, a 300bps increase over one year would result in a 3.6p increase in NAV per share.

HICL offers a prospective yield on the current share price of 4.7%. Covid lockdowns impacted some of HICL’s largest assets. According to the company, these assets continue to recover and this, together with the inflationary backdrop, mean that dividend cover should continue to rise.

Analyst's View

With inflation increasingly being felt across markets and economies, HICL could be a contender for investors wishing to reposition their portfolio to this new reality. As we discuss in the Dividend section, HICL’s cashflows and NAV have already benefitted to an extent from higher levels of inflation.

However, the board and manager have not yet incorporated significant changes to long term inflation expectations into valuations. This means that if inflation does become entrenched at a higher level than currently assumed – even into next year – there is potential upside for investors in terms of the NAV as well as potentially dividends, as dividend cover starts to rebuild. That said, it will take time for revenues to start to reflect contractual inflationary increases.

For those investors wishing to access an investment expected to benefit from rising and/or persistent inflation, HICL is clearly a strong candidate. With HICL’s returns having 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%), HICL should in our view be a consideration for investors wanting to tailor their portfolios towards a new, higher inflation era. The current share price premium to NAV of 7.9% compares to the five-year historic average of 7.5%, suggesting the market is not yet pricing in a significantly higher inflation than the assumptions underpinning HICL’s NAV (see the Portfolio section for more detail).


  • Lower-risk, institutional-quality infrastructure assets within a liquid vehicle that has scale
  • Steady and resilient yield, proven defensive qualities during 2020 Covid-19 crisis and so far this year, with dividend that is cash covered once again
  • 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 covered is relatively low at 1.02x not including accretive sales
Continue to Portfolio
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

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…
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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