Market volatility driven by rising US interest rates and valuation concerns has significantly impacted growth-oriented investment trusts, with the popular Scottish Mortgage trust experiencing a 16.5% share price decline in January. While UK dividends saw a strong recovery in 2021, largely fueled by the mining sector, future growth faces headwinds from persistent inflationary pressures and supply chain disruptions. In this environment, real infrastructure assets offer a strategic hedge against inflation. Nick Scullion, manager of the Foresight Global Real Infrastructure fund, highlights that approximately 70% of the fund’s cash flows are directly linked to inflation, providing stability through long-dated, government-backed contracts. Furthermore, the sector is increasingly expanding into digital infrastructure, such as data centers and fiber cabling, to capitalize on global connectivity trends while maintaining a focus on sustainable, long-term risk-adjusted returns.
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