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This Is The Real Assets Outlook For 2019

Public Infrastructure

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Brookfield’s Public Securities Group just held their Real Assets Outlook for 2019 webinar and their outlook is positive. They acknowledge headwinds exist (trade, China, Brexit) but the trends are clear, economic growth is still on tap. Because the environment is one in which growth has slowed, inflation is low, and the central banks are accommodative real assets equities are what you should be focusing on this year.

Public Infrastructure

The macro outlook calls for modest growth despite headwinds.

In Brookfield’s outlook they say we should expect modest economic growth around the world. On the inflation front Brookfield’s top managers see inflation tick lower over the next year and run below the FOMC’s target 2.0% rate. That, and the FOMC’s moderating stance, will keep interest rates range bound as central banks in Europe and China also seek to stimulate their own economies.

What Does This Mean For Investors?

What this means for investors is that global economic activity will continue in 2019, that inflation will run cool, and the FOMC is unlikely to raise rates. What it means for Brookfield is that real assets portfolios should be skewed toward global infrastructure equities, US MLPs, and real assets debt.

Global infrastructure is being driven by record amounts of spending that are only expected to increase over the next three decades. Key areas of investment for Brookfield are led by the US but include Europe, China/Asia, Australia, and Latin America.

One of several areas of interest includes the build-out of energy infrastructure and specifically that in the US. The US is on a dash to energy independence and expected to spend $800 on new projects over the next 15-17 years.

Energy infrastructure projects will be centered along the Gulf Coast but include other major petroleum producing regions as well. The mid-stream MLPs are of particular interest as they distribution rates and dividend coverage have both improved considerably over the past three months.

Brookfield’s Global Listed Infrastructure Income Fund (INF) is only one of several funds managed by Brookfield Public Securities. It invests solely in infrastructure equities of companies on global exchanges. It is heavily weighted to the US and the Midstream/MLP sector but has exposure to projects in Europe, Asia, and others.

The fund pays a dividend yielding about 8.5% at today’s share prices which is compounded by its growth potential. Infrastructure isn’t a hot growth sector but it is one that is growing, growing long-term, and guaranteed to grow long into the future.