The vital importance of infrastructureInfrastructure is vital in today’s world. All types of infrastructure, ranging from bridges to cross a river to satellites to get your message across are essential to sustain, or enhance, our living conditions. It is the backbone of the economy, the driver of economic growth and it is critical to every stage of economic development, promoting growth ambitions of emerging markets and keeping developed nations competitive.
Limited competition and the regulation of infrastructure assets result in relatively stable income streams, regardless of the economic cycle, and good visibility of earnings. The assets, often with inflation-linked contracts, benefit from high barriers to entry and relatively inelastic demand.
Opportunity for private investorsGiven the lack of a fiscal union and the sovereign debt of individual countries, the funding gap to upgrade or build infrastructure should, in our view, mainly be filled by private investors (listed and non-listed). We believe that listed infrastructure will play an increasingly important role in portfolios. As it has generated superior returns over the past fifteen years, we believe that it significantly improves the efficient frontier, and offers a liquid and diversified alternative to direct investments.
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