The Case For Global Listed Infrastructure
The Case For Global Listed Infrastructure, equities of publicly traded infrastructure companies listed on regulated stock exchanges in countries around the world, is easy to understand. Infrastructure is all around us; we can’t live without it, it facilitates everything we do from making phone calls to using water, driving our cars, and even includes our homes and businesses.
The need for infrastructure is vast, its build-up and maintenance are costly, but a requirement in our lives that provides plenty of opportunity for savvy investors.
Infrastructure, by definition, is the total of all public works whether publicly or privately operated. It includes the waterways and ports our ships use to transport goods, the roads and highways our cars use to travel, the water systems that bring life to large communities, and the electric power grid that lights our lives. The businesses that serve and build infrastructure needs, when publicly listed, have plenty to offer long-term investors.
Real Asset Investing With Global Listed Infrastructure
The Brookfield Global Listed Infrastructure Income Fund (INF) is a closed-end fund specializing in real assets. The fund is backed by an asset management firm with over a century of experience investing in global listed infrastructure, Brookfield, and recently issued its third-quarter report on the real assets market.
In the report, they break-down the 3 trillion dollar global infrastructure market into four broad categories that share three basic characteristics that make them attractive from the investment perspective. 1) Monopolistic business models in industries with high barriers to entry 2) Steady demand for the goods and services they supply and 3) Pricing that is linked to inflation.
According to them, and we agree with them, the outlook for real asset infrastructure is robust. The world’s population is growing and aging which means high demand for new services in developing countries and upgraded services in the more developed world. Total spending is expected to top $70 trillion by 2035 with annual budgets topping $4 trillion spread across a broad swath of the sector.
Because the cost of build-up and management is so high, many governments around the world are turning to privatization as the answer. The need for governments to raise money will be, in Brookfield’s words, the driver of compelling opportunities in this asset class. Also, the balance sheets of infrastructure companies have been steadily improving over the past decade that, along with strategic debt refinancing, put them in a position to finance long-term growth.
This Is Why You Need Global Listed Infrastructure
The foremost benefit of infrastructure to investors is diversification away from stocks and bonds. Along with this is reduced volatility during market downturns as well as protection from inflation.
Historical data shows that real assets deliver better risk-adjusted returns than traditional stocks, above average dividend growth and capital appreciation in nearly all market conditions. The proof of this is the burgeoning real assets asset class which has seen total investment grow from about $5 billion in 2005 to over $100 billion this year.
The bottom line is this; infrastructure is something we can’t live without, we’re spending trillions to build and maintain it, the asset class provide diversification with inflation protection, and is a sound addition to any portfolio. The Brookfield Global Listed Infrastructure Income Fund trades on the NYSE under the ticker (INF) and yields about 8.5% at today’s prices.