With the hunt for yield being renewed by tumbling interest rates and negative-yielding debt the world over, infrastructure ETFs are looking more appealing. That includes the AGFiQ Global Infrastructure ETF (GLIF).
The AGFiQ Global Infrastructure ETF uses a multi-factor investment process to seek long-term capital appreciation by investing primarily in global equity securities in the infrastructure industry.
The infrastructure category has also historically offered higher dividend yields than global fixed-income and global equities, along with greater predictability of long-term cash flows. The ETF may be able to capture the growing demands of economic developing that are driving more funding into transport, power, and other systems.
“Infrastructure assets, including utilities, oil and gas pipeline networks, communications and transportation infrastructure, provide important services to the broader society,” according to Seeking Alpha. “These assets can provide stable and predictable cash flow that is buttressed by long-term contracts or regulation, as well as monopolistic characteristics and high barriers to entry. Moreover, listed infrastructure companies offer liquid access to illiquid assets.”
GLIF ETF’s Long-Term Potential
GLIF is an appealing idea for long-term investors not just because of its status as a defensive yield play, but also due to favorable fundamental factors.
“In a 2017 report, the consulting firm McKinsey estimated that $3.7 trillion of investment in economic infrastructure will be needed every year from now until 2035. Moreover, infrastructure investment will continue to shift to emerging markets, with developed markets taking a comparatively smaller share of investment,” reports Seeking Alpha.
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Infrastructure developments are typically large, long in duration and capital-intensive, carrying a high overall cost. Nevertheless, the projects compensate investors by including fairly predictable expenditures to maintain the asset, as well as regulated pricing that typically provides stable and reliable cash flows. Select investors have long enjoyed the unique characteristics of infrastructure to diversify equity risk exposure, generate income and hedge against long-term inflation
“Diversification can help mitigate risk in concentrated exposure to economic downturns or regulations in one specific region,” notes Seeking Alpha. “The outlook for global listed infrastructure remains positive, due to their quality defensive characteristics that can provide sustainable cash flows in face of market volatility.”
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