With another presidential election year right around the corner, infrastructure spending and investments are receiving renewed attention. The AGFiQ Global Infrastructure ETF (GLIF) is one of the more compelling avenues for tapping those themes.
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.
An estimated $79 trillion will be spent on global infrastructure from 2016 through 2040, but the investments still fall short by $15 trillion of the required $94 trillion needed.
One of the advantages of infrastructure is that regardless of what the global economy is doing, it’s a necessity. Furthermore, it’s less prone to the cyclical movements of the economy, which makes it a viable alternative as a defensive play.
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.
Infrastructure Developments
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.
The Organization for Economic Co-operation and Development is calling for $70 trillion needed in infrastructure spending around the world, but governments have only earmarked $45 trillion, leaving a gap of around $25 trillion that is not going to be covered. Consequently, private spending may need to step in to fill the gap.
U.S. infrastructure offers plenty of potential for investors but has also been a vexing concept because it has been generations since Uncle Sam last passed a substantial infrastructure spending package.
Related: Alternative ETFs to Hedge Potential Risks in Europe
Furthermore, infrastructure exposure could help protect against long-term inflationary risks since most infrastructure operators pass through the cost increases of inflation to users per long-term contracts that typically underpin the infrastructure business models.
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.
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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.
