Global infrastructure investments expected to thrive
Investment in the global infrastructure sector is expected to reach US$40 trillion by 2030, according to VanEck' whitepaper.
The "Investing in Global Infrastructure" report said that the growth was expected to be driven by a significant shortfall of global infrastructure and a huge underinvestment of the sector over the past three decades, especially in western economies, as well as by a growing population.
According to VanEck, infrastructure assets were typically long lived, protected by barriers to entry and benefited from inelastic demand which resulted in steady income streams for investors, particularly attractive in the current environment of slow economic growth, market volatility and constrained returns.
VanEck Australia director of investments and strategy, Russel Chesler, also noted that investors were forced to allocate assets to riskier investments while global listed infrastructure provided a mid-range dividend yield which was more stable than equity yields. Also, infrastructure securities demonstrated a low correlation to other asset classes and provided diversification benefits.
According to VanEck, global infrastructure was one of the best performing asset classes returning 12.78 per cent year-to-date and it stressed that historically investments in large infrastructure assets were limited to large institutional investors.
"While the substantial deficit in infrastructure assets will prompt governments around the world to invest considerably in infrastructure assets in the coming years. The defensive characteristics of global infrastructure securities are just as likely to drive private sector investment in the sector as a shield against ongoing market volatility," he said.
This year, VanEck launched Australia's first global infrastructure exchange-traded fund (ETF) on the Australian Securities Exchange, which gave investors access to global infrastructure securities and tracked the FSTE developed core infrastructure 50/50 hedged into the Australian dollar index.
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