One alternative asset which has gained advantage from the current market is the asset-financing sphere – where ship and aircraft-leasing companies have benefited from escalating transport costs and a recovery in travel following the pandemic. The costs to hire a ship for a day are increasing owing to supply constraints, exacerbated by Russian ships not being able to dock in Western countries following Russia’s invasion of Ukraine.
There has also been a lack of certain types of ships being built over the last decade. Essentially, there is a shortage of shipping capacity, particularly in the smaller and mid-size ships that transport cargo to smaller ports that don’t have the ability for large vessels to dock. The aviation sector is also benefitting as airlines get their cargo planes back off the ground.
These assets might not have inflation-linked revenue like renewables or infrastructure, but in many cases their secondary-market values are rising on the back of higher commodity, energy and labour costs. In addition, companies are considering the overall costs of running older assets for longer, versus replacing them with new ships or aircraft.
Paul Flood, portfolio manager and strategist, Newton Investment Management.
Doc ID: 1035600