Infrastructure Insights

Building resilient returns for an uncertain future

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There is little clarity on the depth of the recession or what a staged recovery looks like, and predicting the daily economic habits which may change structurally is highly speculative. Investors are examining portfolios and re-evaluating their allocations, asking how each asset exposure fits this environment.

In this economic maelstrom, however, the fixed and essential function of the listed infrastructure sector make it a resilient long-term investment. Moreover, the stock market downturn opens an opportunity as many listed infrastructure companies are mispriced, as we discuss in Section 1.

On a longer horizon, there are characteristics governing the asset class which give it global growth opportunities and a predictability of revenue. We explore this in Section 2. Earlier in the journal we discuss the creation of a de novo infrastructure investment trust (IIT), as recommended in the recent G20/OECD report, aimed at allowing private capital to help strapped governments build and maintain essential infrastructure post-COVID and into the decades ahead.

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Despite headwinds to defensive stocks, infrastructure’s strong earnings growth, attractive valuations and predictable dividend stream make us quite constructive on the sector.

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