The investment industry is pondering whether infrastructure should be its own asset class, and with the launch of some exchange traded funds (ETFs) that invest in such companies, the idea is carrying some weight.
Companies involved in the operation of toll roads, airports and seaports should represent a new asset class, experts say. However, the ETFs focused on this area haven’t been quick to gather assets. That might have to do with their recent performance, and not not because of a lack of acceptance of the idea that infrastructure should be its own class.
But short-term underperformance is not enough to take away the fact that infrastructure is a good long-term investment and many financial advisors see the logic of investing in them, reports David Hoffman for InvestmentNews.
But there are naysayers: giving infrastructure its own asset class is too much like a marketing gimmick, say many industry insiders. It gives it a “trendy” feeling.
One can’t deny that infrastructure both in the United States and overseas is catching on – on our own turf, we have an aging power grid, as well as roads and bridges that seem to be continually in need of an upgrade. In other countries, especially in emerging markets, there is plenty of room to grow when it comes to infrastructure improvements.
Among the options:
- SPDR FTSE/Macquarie Global Infrastructure 100 ETF (GII): down 16.6% year-to-date; $91 million in assets
- iShares S&P Global Infrastructure Index (IGF): down 22.4% year-to-date; $155 million in assets
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.