In this Q&A, Richard Elmslie, Co-Chief Investment Officer and Co-Chief Executive of RARE Infrastructure, explains the growth potential for infrastructure assets over the next decade and their resilience in the face of future downturns.
Rising bond yields can have a different impact on the fundamental valuation and market price of regulated utilities and user-pay infrastructure. An in-depth understanding of these impacts enables an active, benchmark-unaware manager to better navigate through the economic cycles.
Airports, electrical plants, gas pipelines, rail and roads provide essential services. The relatively predictable nature of the demand for such assets means the market price of the companies that manage them can act differently to other equities.
Infrastructure stocks have been the one of the hardest hit sectors of the equity market over the past five months. It is our view that sentiment and not true fundamentals have caused much of this impact. But such sentiment is reversible given long-term fundamentals for infrastructure, with large investors now seeing multiples here at attractive valuations.
Is listed infrastructure insulated from the end of a market cycle, and if so, to what degree? RARE’s co-chief investment officer, Nick Langley, explains the market drivers for these stocks.
Chart of the Week
Chart courtesy of Clarion Partners. * Source: CBRE-EA, Clarion Partners Investment Research, Q3 2018, latest available figures. Past performance is no guarantee of future results. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
Chart of the Week
U.S. consumers had a downbeat December; China-U.S. trade talks were set to reconvene in Washington; Mexico's Pemex got yet more help; U.K. clothiers discounted deeply, pre-Brexit
Timing a rotation into defensive sectors in 2019 will be critical as the longest-ever bull market draws to a close. Listed infrastructure is one such haven for investors.
With the rise of air travel, airports have become essential to the functioning of societies. RARE Infrastructure makes the case for investing in listed companies that own airports.
Listed infrastructure opportunities
The Chinese Government’s ‘One Belt, One Road’ initiative is a foreign trade policy and economic strategy to develop the historic Silk Road trade route from China to Europe. RARE assesses the opportunities for investors in global listed infrastructure.
Because they impact trade flows, tariffs have implications for port, road and rail systems. This could end up stimulating investment in new infrastructure capabilities.
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