Listed Infrastructure | First State Investments

Infrastructure describes the physical assets that provide essential services to society. From airports we travel through, toll roads we drive on and the water we drink – infrastructure assets are the backbone of any economy. The main infrastructure sectors are: toll roads, airports, ports, rail, energy infrastructure, communications infrastructure and utilities (electricity, gas and water).

Why invest in infrastructure? 

Infrastructure is considered to be a unique investment class, appealing to a broad range of investors, due to a number of attractive characteristics which can contribute to their stable income and growth: 

– High entry barriers: In most cases, infrastructure assets are government legislated or natural monopoly providers of essential services.
– Pricing power: Infrastructure assets tend to have inelastic demand as they provide essential services that tend to be resistant to economic downturns.
– Predictable cash flows: Infrastructure assets have an ability to generate cash flows that are highly predictable.
– Sustainable growth: Infrastructure assets generally have a growth profile supported by long term economic and demographic trends. They tend to be relatively immune to economic cycles and exhibit defensive qualities in falling markets.

Benefits of investing in global listed infrastructure 

There are many benefits from investing in a portfolio of global listed infrastructure companies including:
– Structural growth which is less dependent on the economic cycle
– Attractive risk-adjusted returns; stable cash flows from assets providing essential services
– Inflation protected income; attractive yield with an inflation hedge
– Diversification and low correlation with other asset classes
– Liquid and transparent; freedom to move in and out of positions; listed funds provide daily pricing; and listed companies are typically more highly scrutinised by regulators, governments, unions and the media.