New Research Reveals Investors Flocking to Listed Infrastructure
Published on 17 Nov, 2015
The Investment Research & Analytics division at Aranca releases its new report: Listed Infrastructure – An Attractive Alternative
New York (November 17, 2015): Anticipating the likely interest rate hike by the U.S. Federal Reserve later this year, the Investment Research & Analytics division at Aranca, a global customized research and analytics company, released its new report: Listed Infrastructure – An Attractive Alternative showing that listed infrastructure is attracting investors in a big way.
"There is no doubt inconsistent economic indicators, the Greek crisis, a slowdown in China coupled with low bond yields and the fall in gold prices impacted investor returns," said Subarna Poddar, senior analyst, Investment Research & Analytics at Aranca, who authored the report. "Listed infrastructure, on the other hand, is gradually gaining traction among fund managers due to its monopolistic nature, price inelasticity, stable predictive cash flows and inflation hedging characteristic."
Traded in the form of equities with strong government backing, these investments have acted as a defensive play for many during the downturn. The stability of these investments is attributed to demand for these assets often being inelastic to price changes – such as electricity, water and tolls – as people continue using these utilities despite tax changes.
"Comparing the performance of the S&P Global Infrastructure Index with its peers over the pre- and post-economic crisis period, we can see that infrastructure clearly outperformed during the pre-crisis in 2006 and 2007 and post-recovery period beginning in 2012 and onward," Poddar said. "The asset class has remained superior to equity investments over 12 years, which is how we conclude that it offers better returns irrespective of the economic conditions."
This year has witnessed significant volatility in global equity markets dampening investor sentiment. In such a scenario, where most sectors are underperforming, listed infrastructure with its stable returns and moderate risks is likely to continue to gain attention of global fund managers.
Listed infrastructure is an asset class that offers high returns as well as steady income and assured capital benefits. The equity route makes it less capital intensive and provides benefits of the bull-run during a positive economic scenario. The inflation-linked nature of revenue from infrastructure businesses enables automatic hedging against any rise in interest rates, thereby providing listed infrastructure an edge over other investment options.
"We believe upgrading infrastructure is expected to become one of the key focus areas for governments of emerging economies," said Ati Ranjan, head of the Investment Research & Analytics division at Aranca. "Demand for electricity, water and sanitation would significantly increase due to higher population growth and urbanization."
Pease find the full report, Listed Infrastructure: An Attractive Investment Alternative, here: Listed Infrastructure – An Attractive Alternative
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