What it is
Infrastructure generally refers to the physical systems society relies on, such as power generation and transmission, pipelines, ports, roads, data networks and water services. An infrastructure equity private fund is a pooled vehicle that takes ownership stakes in assets or companies of this kind, usually with a long time horizon.
Real assets is a broader family that also includes natural resources such as timberland, farmland, minerals and other commodities-linked holdings. Energy and transition funds focus on conventional energy, renewable energy, grid modernization and related technologies. Each category carries its own risks, regulations and economics.
These are private funds, offered by the issuer under its own offering documents, and typically only to eligible investors. Many rely on SEC Rule 506(b), which prohibits general solicitation, or Rule 506(c), which permits general solicitation but requires that all purchasers be accredited and that the issuer take reasonable steps to verify that status.
How it’s traditionally been approached
Historically, people exploring this area have started by learning how infrastructure and real assets differ from stocks and bonds. Common topics include the long life of the assets, their sensitivity to regulation and commodity or demand conditions, and how they may behave differently from other holdings.
Many investors have approached these funds as a small part of a broader, diversified plan built with their own licensed advisers. Because holdings can be large, complex and long-lived, fund terms often run for many years, and investors are generally expected to be comfortable without ready access to their capital.
Eligibility is often a first step. Under SEC Rule 501(a), accredited-investor categories include individuals with income above $200,000 ($300,000 jointly with a spouse or spousal equivalent) in each of the prior two years, or net worth over $1 million excluding the primary residence. Since the August 2020 amendments, holders in good standing of Series 7, 65 or 82 licenses, knowledgeable employees of certain private funds, and registered investment advisers and exempt reporting advisers may also qualify. Entities and family offices with over $5 million in investments or assets can qualify as well.
How the right fund manager may help
The right fund manager may help you make sense of a technical field. A good conversation can clarify what a strategy actually owns, how long capital may be committed, how the manager approaches risk, and how fees and expenses are described in the offering documents.
A first conversation is typically informational. A manager may walk through their general approach, the kinds of assets they focus on, and the eligibility rules that apply. Nothing about a conversation obligates you, and any offering is made only through the issuer's own documents.
Useful questions include: What does the fund own or finance, and what could go wrong? How long is capital expected to be tied up, and what are the terms for withdrawals? How are fees, expenses and conflicts disclosed? What tax reporting should I expect, such as K-1s? Then review the answers with your own licensed investment, legal and tax advisers.
The bigger picture
Money decisions are personal. Committing capital for many years can affect how secure and flexible you feel, so it helps to consider your time horizon, your need for cash, and how much uncertainty you can live with comfortably. A decision that fits your life tends to be easier to sleep on.
Take your time, involve people you trust, and avoid pressure from anyone. If financial stress is affecting your health or relationships, Providers.plus can help you find wellbeing resources. No approach to planning is right for everyone, and each deserves respect.
Keep in mind
- Private fund investments are speculative and illiquid and can lose all of their value.
- Past performance does not guarantee future results, and no outcome is promised.
- Tax treatment, including K-1 reporting or the potential relevance of Section 1202 (QSBS) to certain holdings, depends on individual circumstances; consult your own tax adviser.
- The Hastings Fund is not a broker-dealer, funding portal or investment adviser and does not recommend, endorse or rank any investment or manager. Consult your own licensed advisers.
Fund managers
We’re welcoming founding fund managers for infrastructure & real assets now. Get matched or list your practice.
Frequently asked questions
What is an infrastructure private fund?
An infrastructure private fund is a pooled investment vehicle that owns or finances physical systems such as energy, transportation, utilities or communications networks. It is offered privately by the issuer through its own offering documents, usually to eligible investors. These funds are speculative and illiquid and can lose all of their value.
What are real assets?
Real assets are tangible or physical holdings, such as infrastructure, real estate, timberland, farmland and natural resources. Their value is tied to the underlying asset and its use. Each type has its own risks, so it helps to learn the differences before comparing options.
Who can invest in infrastructure and real assets private funds?
Most are limited to accredited investors, as defined in SEC Rule 501(a). Individuals may qualify through income, net worth, or certain professional licenses such as Series 7, 65 or 82. Entities and family offices with over $5 million in investments or assets may also qualify, and some funds have additional requirements.
How is a 506(b) offering different from a 506(c) offering?
A Rule 506(b) offering cannot use general solicitation, while a Rule 506(c) offering can. In a 506(c) offering, all purchasers must be accredited and the issuer must take reasonable steps to verify that status. Your own legal adviser can explain how each applies to you.
Are energy and transition funds the same as infrastructure funds?
Not exactly, though they can overlap. Energy and transition funds focus on areas like conventional energy, renewables and grid technology, while infrastructure funds may also cover transport, utilities and digital networks. Always read a fund's offering documents to see what it actually holds.
How long are infrastructure funds typically locked up?
Infrastructure and real assets funds often have long terms, and investors may be unable to withdraw capital for many years. The exact terms are set out in each fund's offering documents. Because of this illiquidity, it is wise to review the terms with your own licensed advisers before making any decision.
Educational resource. The Hastings Fund shares general information and connects people with independent fund managers. It is not professional advice. Talk with a qualified professional about your own situation.