Infrastructure Assets

Infrastructure assets can be broadly described as facilities, services and networks which provide essential economic and social services to the public.

What are the benefits of investing in Infrastructure Assets?

1. Monopolistic assets

Some of the infrastructure stocks tend to be monopolistic or near monopolistic in nature (that is, the assets have limited competition from other assets). This provides these stocks with a strategic competitive advantage. Eg. Sydney Airports (SYD).

2. Income generation and inflation hedge

Reliable long-term index cash flows which can provide a good match for long-term inflation link liabilities (linked to the contracts and pricing) and stable long-term yields.

3. Diversification

Infrastructure assets have favourable (low) correlation benefits with a number of traditional assets and therefore inclusion in a portfolio should reduce the risks in a portfolio without adversely affecting the portfolio returns, or may conversely increase the overall return from the portfolio for the same degree of risk.

4. Long dated assets

Some assets tend to have long economically useful lives and operate under long term concessions/agreements.

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