All it takes is a quick scan of the news to know that infrastructure markets are stronger than ever. The need for infrastructure is abundant worldwide, the money to fund the projects is there, and investors are interested in what the sector has to offer. What is has to offer is this; steady revenue for the businesses, high income for investors, a measure of protection from inflation, and added diversification within the portfolio.
Global Infrastructure News
Boral CEO Mark Kane said in a recent interview, post-earnings release, that the Australian infrastructure boom will support the performance of his company over the long-term. Spending in the country has never been higher as public and private funds compete for dominance. The main driver of the boom is population growth and the industry is struggling to keep up with demand.
Black Rock and KKR recently announced a deal worth $4 billion in infrastructure spending. They have partnered with ADNOC, Abu Dhabi National Oil Company, to build a new mid-stream pipeline company. The new company, ADNOC Oil Pipelines, will service ADNOC’s up and down-stream assets and provide an additional revenue stream for the company. ADNOC will own 60% of the new company while Black Rock and KKR will own the remaining 40%.
“Worldwide now, investors are looking for long-dated high-quality assets… This was something our investors were very, very interested in. If anything we want to put more money in, that’s the type of demand we saw.” Blackrock CEO Larry Fink
Analyst Mark Rathbone at PWC Singapore sees the inflow of pension fund capital to emerging markets infrastructure investments on the rise. To him, the challenge is not in finding the capital but for governments and localities to form sustainable projects. China and Indonesia are particularly attractive regarding investment with transportation, utilities, and waste management topping the list of growth sectors.
Spending on infrastructure is even expected to increase in the U.S. With billions in needed spending on repair alone U.S. lawmakers are expected to agree on some form of infrastructure spending this year. President Trump himself spoke in favor of the great rebuilding of America at his State of the Union Address. Such a deal would not only boost infrastructure stocks but could result in a wider fiscal impact to the U.S. economy.
How To Invest In Global Infrastructure
Investing in global infrastructure is easy but there are some hurdles including which country, which sectors, and which stocks to choose. This is why infrastructure focused funds like the Brookfield Global Listed Infrastructure Income Fund (INF), the Blackrock Utility&Infrastructure Trust , and the Macquarie Global Infrastructure Total Return Fund (MGU).
All three funds provide high income, in the range of 7% to 8%, and all provide ample exposure to the benefits of infrastructure and real assets investing. One, however, is more attractive because of better diversification. The Brookfield Global Listed Infrastructure Income Fund.
Where MGU is skewed in favor of energy and BUI in favor of utilities the Brookfield Global Listed Infrastructure Income Fund is more broadly diversified. Holdings fluctuate from quarter to quarter but tend to include a wider range of sectors, provides better exposure and yields the highest rate at just over 8.0%.