PRIVATE INCOME – INFRASTRUCTURE, PRIVATE CREDIT, INCOME OPPORTUNITIES
The Private Income strategy aims to provide the Fund with a high level of income and limited volatility, through investments in infrastructure, private credit and other income opportunities. Across the portfolio, investments should offer a significant level of downside protection.
KEY PORTFOLIO FIGURES
as of June 30, 2017
Targeted Annual Investment Pace
Target Allocation (Growing to 9%)
The Private Income strategy invests in a broad range of strategies covering infrastructure, other private real asset investments (such as timber and hard asset leasing), private credit, opportunistic / distressed credit and other private market investments that provided income generation to the Fund. We target assets and strategies that provide a combination of principal protection, current income (e.g. interest payments or dividends), inflation mitigation and equity upside. We target an absolute return in excess of CPI + 4%, but evaluate each opportunity on the expected return, relative to the risks we are taking.
Infrastructure investments are often long-lived, with inflation protection characteristics. APFC invests through funds, direct investment and coinvestment into a portfolio of assets that is diversified by geography and sector. These assets include: power generation, timber, electric utility, midstream energy, transportation, water and waste, telecommunications, and other infrastructure.
Private Credit investments are often assetbacked and generate high current income.
The APFC invests through funds into a portfolio of assets that is diversified by strategy, industry and geography. These strategies include: direct lending, mezzanine lending, distressed/opportunistic credit, asset-based lending, and other strategies. While the portfolio is currently focused primarily in the U.S., we evaluate opportunities globally.
Special Income investments are made to capture attractive, sometimes fleeting, opportunities that do not fit into the Private Credit or Infrastructure portfolios. The portfolio primarily consists of a jointventure with American Homes 4 Rent, but we continue to evaluate opportunities that are created due to economic, regulatory, and relative value anomalies.
The performance target for the Private Income portfolio is a real return of CPI + 4.0%. The life-cycle of Private Infrastructure and Special Income investing, which can be similar in structure to private equity, will in many circumstances contribute to an uneven return profile or J-Curve phenomena for investments early in their respective life-cycle.