The world’s largest infrastructure investors and fund managers outperform the wider market due to their access to the best assets – but not because of asset allocation decisions, the EDHEC Infrastructure Institute has concluded.

By aggregating and analysing the portfolios of the top 20 largest infrastructure asset owners and asset managers – as ranked by IPE Real Assets – EDHECinfra found notable differences between the two peer groups.

While both outperformed the wider market, large fund managers were the best performers on a risk-adjusted basis, because of their propensity to buy and sell more regularly.

“Because asset managers exit their investments regularly, they can also benefit from market-timing effects, which are not necessarily available to the top asset owners,” EDHECinfra said in report.

Major asset owners, meanwhile, had a greater exposure to larger assets, which they held for longer. The aggrated asset-owner portfolio included 31 investments made over 10 years but featured only one exit, leaving 30 assets in the portfolio today with a market value of US$47bn.

The aggregated asset manager portfolio included investments in 118 assets over the same period but with 54 exits, leaving 64 assets (by the first quarter of 2020), representing US$53bn of market value.

However, both peer groups outperform the market “because they manage to invest in the best assets”, rather than through allocating to different sectors or business-risk segments.

“Instead, they often underperform the benchmark because of their implicit or de facto asset allocation choices,” EDHECinfra said.

The report also found that, in comparison with the wider market, large fund managers had greater exposure by value to merchant assets and a clear bias towards transport at the expense of smaller sectors like renewables and social infrastructure.

Large asset owners, meanwhile, displayed “a small bias” towards regulated assets, but favoured more contracted and less merchant infrastructure than large asset managers.

The 20 largest asset managers include Macquarie Infrastructure & Real Assets, Brookfield Asset Management, Global Infrastructure Partners, M&G and IFM Investors.

The 20 largest asset owners include insurer Allianz, Canada Pension Plan Investment Board, Caisse de Deport et Placement du Quebec, South Korea’s National Pension Service and Abu Dhabi Investment Authority.