2021 Infrastructure: Year in Review
Alternative Investments Team
2021 Infrastructure: Year in Review
As we reflect on the unprecedented year that was 2021, the importance of infrastructure to a diversified portfolio has never been so pronounced. The TD Greystone Infrastructure Fund (the “Fund”) continues to benefit from the stable, contracted and growing cash flow of our underlying infrastructure projects. This cash flow has been the foundation of our strong performance in 2021, complemented by tremendous growth in our platform investments where we've added new infrastructure projects to grow the fund for our investors throughout the COVID-19 pandemic.
The COVID-19 pandemic's impact on Global Infrastructure
With the largest vaccination campaign in history underway, there was hope for the end of the pandemic, which brought fresh fears of inflation as supply chains struggled to resume, only to be met by new COVID-19 variants driving renewed lockdowns. Despite this, infrastructure has continued to prove resilient during a crisis and 2021 was another strong year for the Fund.
In 2021 we added to our team, continued to grow our portfolio, invested in our holdings, and are well positioned to continue to deliver investment excellence. To help highlight the past year, the Alternatives Investment Team at TD Asset Management Inc. ("TDAM") has written a paper titled 2021 Infrastructure: Year in Review.
Stability and Consistency through Crisis
The resilience of certain segments of infrastructure through times of stress, like we are experiencing today, is dependent on several factors, including stability of cash flow, organic growth and high-quality management. These factors are essential to infrastructure providing diversification, return enhancement and inflation protection.
Despite the stress experienced during the pandemic, our Fund continued to deliver strong results that are shown in the article. Throughout 2021, our one-year return was 8.8% in CAD, and throughout the pandemic our two-year annualized return was 12.7% in CAD. These results are underpinned by significantly contracted cash flows, where over 85% of our revenue was contracted at the start of 2021. At TDAM, we look for assets that will provide significant stability and cash flow. Throughout this past year, our income return was 2.6% with an over 4% total cash yield. This stability allows us to continue to invest in growth in our portfolio in our renewable energy, transportation, and power infrastructure holdings.
The Right Portfolio at the Right Time
The article also highlights our platform investments, as well as identifies infrastructure opportunities that may help drive returns for our investors. We have four active platforms in airport logistics, solar power, renewable energy, and battery storage, which help drive growth in our portfolio through large numbers of development projects and tuck-in acquisitions.
While these platforms have driven growth historically, they are uniquely positioned to continue to drive growth going forward. Additionally, the energy transition is expected to drive over $150 billion of investment over the next 30 years as economies seek to decarbonize their electrical grids. This is expected to drive investment in renewable energy and power infrastructure. To learn more on our thoughts regarding the energy transition, please view our article titled Private Infrastructure: The Energy Transition Opportunity.
The value of our expertise
For alternative investment managers, portfolio construction, asset quality, managing relationships and risk management are critical factors in navigating the current environment. Moreover, during this pandemic, there are areas of the market that continue to provide enhanced income stability, capital preservation and income growth potential.
Ultimately, the role of real asset investments within an investor’s total portfolio mix remains steadfast in providing attractive income, lower correlation and improved diversification with other asset classes, translating into higher expected risk-adjusted returns for total investment programs.
At TDAM, we believe that we offer an infrastructure solution that can help you achieve your portfolio’s goals by leveraging our approach of integrated risk management and active investment management across alternatives. TDAM is one of the largest investment managers in Canada and has a growing international presence. Supported by over 800 employees, TDAM brings the multi-asset perspective of a large asset manager, the governance and controls of a bank owned manager, and the deep experience of a real asset manager to our infrastructure offering.
More by this Author