Biden election win should trigger infrastructure spend

With the US election outcome closer to being settled, expenditure on infrastructure is expected from the incoming Biden administration, according to 4D Infrastructure.

After the COVID-19 pandemic, Sarah Shaw, 4D global portfolio manager and chief investment officer, said the second big event of 2020 was the US Presidential election.

“The presidency of Donald Trump has been one of the most polarising in recent American history and it led to an election that was of far greater significance than normal,” Shaw said.

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“What we have seen in a rare convergence of views is that there is an agreement between Republicans and Democrats that the US is in dire need of spending to upgrade ageing infrastructure, as well as investing in new infrastructure to support the future generations.

“This is a clear positive for the sector as we believe the public sector spend will lead to greater private sector involvement.”

Shaw said in terms of economics, both the parties in the US had also committed to increased fiscal stimulus.

“But [they] so far have not been able to agree on the size, scope and target for that spend,” Shaw said.

“However, with this further stimulus in the pipeline, we do believe there is further support for a solid global recovery in 2021.”

Once we move past the worst impact of the virus, Shaw said infrastructure spending was expected to play a role in the global recovery.

“Infrastructure in all its forms is going to be essential to the global economic recovery and returning society to a new normal,” Shaw said.

“Studies show that for every $1 of infrastructure investment, economies get a boost of anywhere between $3 to $5.”

According to FE Analytics, within the Australian Core Strategies universe, there were seven funds in the infrastructure sector that held at least 50% to North America.

The 4D Global Infrastructure fund, which lost 13.09% over the previous 12 months to 31 October, 2020, allocated 27% to the North American sector.

Return of Infrastructure funds with majority holding in North America

Fund

North American allocation

One year to 31 October 2020 performance

UBS Clarion Global Infrastructure Securities

60.12%

-8.75%

Omega Global Listed Infrastructure

68.82%

-11.08%

Van Eck Vectors FTSE Global Infrastructure ETF

66.50%

-11.8%

Redpoint Global Infrastructure 

61%

-12.01%

Ausbil Global Essential Infrastructure

51.03%

-10.74%

AMP Capital Global Infrastructure Securities Unhedged

59.17%

-14.39%

AMP Capital Global Infrastructure Securities Hedged

59.67%

-15.54%

Source: FE Analytics

 




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