Infrastructure Investing: What to Know
The world we live in is aging rapidly. Our once vibrant bridges and roadways are in desperate need of repair. The average age of U.S. dams is 56 years old. Many airports and seaports are no longer viable. Here’s what you need to know about infrastructure investing.
What Is Infrastructure Investing?
Industries that comprise the infrastructure sector include airports, engineering and construction, infrastructure operations, integrated shipping, and oil and gas midstream. Plus, railroads, shipping and ports, trucking, and utilities should also be included. Infrastructure equity funds devote “more than 60% of their assets” to companies in the sector. Investors who want to know more about infrastructure should take a hint from a report by U.S. News on mutual fund rankings. Put simply, the need for improved infrastructure provides an excellent investment opportunity.
Infrastructure is often something that gets neglected in government budgeting. But in recent years there has been a greater sense of urgency to address this critical issue. Additionally, many private companies have stepped up to fill the void of investment needed for sustained infrastructure growth.
Consider Investing in Infrastructure
- Lazard Global Listed Infrastructure Port (GLIFX)
Investments in equity securities, principally common stocks, of infrastructure companies comprise 80% of the fund’s assets. At the top ranking in the report, GLIFX invests in airports, pipelines, ports, railroads, telecommunications, toll roads, utilities and other infrastructure companies.
- Cohen & Steers Global Infrastructure Fund (CSUAX)
At least 80% of total assets in the fund provide investments in airports, marine ports, pipelines, railroads, telecommunications, toll roads and utilities. Ranked in the second position by the report, CSUAX may invest at least 30% of its assets to businesses located outside the U.S. or those doing a “substantial” amount of work there.
- Nuveen Global Infrastructure Fund (FGIAX)
To achieve long-term capital growth and income, FGIAX devotes approximately 80% of its net assets to equity securities of “U.S. and non-U.S. infrastructure-related companies.” The fund’s diversified investments extend to many countries around the world. 25% may go to issuers of emerging market equity securities.
- Columbia Global Infrastructure Fund (RRIAX)
Ranked fourth behind GLIFX, CSUAX and FGIAX, the fund offers long-term capital growth. RRIAX typically puts 80% of its assets into equity, fixed-income or convertible securities. It may also invest in infrastructure-related activities.
- Morgan Stanley Institutional Global Infrastructure Port (MTIPX)
Rounding out the top five infrastructure equity funds, MTIPX focuses on providing “both capital appreciation and income.” The fund typically devotes 80% of its assets to investments in equity securities of infrastructure companies around the world. It may invest as much as 100% of total assets to foreign securities. And some may go to those in emerging markets.
Why You Should Invest in Infrastructure Companies
Profit Trends‘ Energy and Infrastructure expert David Fessler had this to say… “While it doesn’t look like there is a big infrastructure spending bill on the horizon before the election, it’s on the radar screens of many congressional Republicans and Democrats. It might be a little early, but I believe infrastructure is another sector that is going to experience rapid growth over the next decade.”
Fessler has had his finger on the pulse of infrastructure investing for decades. 5G buildouts are one of his main areas of focus. In a recent article, Fessler said, “5G, the coming fifth-generation wireless network, promises huge disruptions around the world. Some people even believe it could launch the next industrial revolution. Many countries have had their foot on the 5G infrastructure buildout accelerator pedal for years already. The U.S. has only recently stepped up its 5G network buildout.”
5G will continue to improve all areas of our life and could potentially add an additional $3 trillion to global GDP growth.
The Bigger Infrastructure Picture
A pressing need for infrastructure may give investors some guidance in deciding what to invest in throughout the 2020s. Margaret Thatcher famously said, “You and I come by road or rail, but economists travel on infrastructure.” Economic growth is certainly aided by an increase in infrastructure quality. Reduction in income inequality as well as job creation are two important factors to keep an eye on as large-scale initiatives move forward.
A growing awareness of urgency may inspire investors to select an investment that offers both financial rewards as well as beneficial outcomes to the nation and the world. To learn more about infrastructure investing, sign up for Profit Trends below.