Investments in public projects increasing in popularity

Irish savers are likely to start following a trend that has seen investors in Britain and elsewhere combat low returns from instruments such as sovereign bonds by backing public infrastructure projects.

Savers can invest in projects such as renewable energy, education, healthcare and various public-private finance initiatives by buying into listed companies that specialise in lending to these projects.

Late last year, two London-listed companies, International Public Partnerships and GCP Infrastructure Investments, raised £180 million (€209 million) and £80 million respectively to fund growing demand for infrastructure funding.

The bonds allow savers to buy into the senior and subordinated debt provided to infrastructure projects, which are largely longer-term investments with predictable yields over the life of the loan.

According to Conor Martin of investment adviser Smith Williamson, such investments are growing in popularity because they offer a viable alternative to instruments such as equities and bonds.

Shares are exposed to ongoing volatility, while there is a risk bonds will deliver negative returns.