In this Q&A, Richard Elmslie, Co-Chief Investment Officer and Co-Chief Executive of RARE Infrastructure explains the exciting growth potential for infrastructure assets over the next decade and their resilience in the face of future downturns.
What is the projected growth of global infrastructure assets?
An astronomical amount of money is estimated to be spent on infrastructure between now and 2030 — three separate studies put the figure in the region of $50 trillion.
How would a potential large-scale slowdown in the global economy impact on that growth story?
During the last big downturn in 2008, markets pulled back and some infrastructure projects were delayed but in any future downturn, governments may seek the stimulus to growth which infrastructure can provide.
With interest rates projected to rise in the U.S, how will this impact the appeal of bond-like equity sectors?
The beauty of being a global investor is that rates generally don’t rise everywhere simultaneously. So, if we believe rates will rise sharply in one area, we would avoid those stocks most sensitive to the rise and wait for an opportunity to buy.
To what extent will President Trump’s difficulties to pass new legislation hinder the potential growth of U.S. infrastructure over the coming years?
RARE never had expectations following a Trump win that the infrastructure spend would come quickly, but the renewed focus on the area may well encourage investors to recognise the value of the asset class.
Why is Brazil one of RARE’s biggest country holdings in emerging markets?
The main themes in Brazilian infrastructure are the privatization opportunity from state-owned distribution companies, and the auctioning of transmission assets. RARE foresees a secular story of solid growth, with return prospects increasing for many years in the transmission sector.