Infrastructure is a hot political issue and as such, it’s gaining momentum in investment circles with the AGFiQ Global Infrastructure ETF (GLIF) providing an opportune way for investors to tap an important asset class.
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. President Trump is pitching a 10-year, $1 trillion infrastructure plan, which is scaled back from his 2016 campaign trail plan. Indeed, costs play a role in determining the fate of domestic infrastructure efforts.
“Listed infrastructure is not an easy investment to categorize. To some, it’s part of the alternative universe of asset classes and strategies that can help fortify traditional 60/40 portfolios; for others, it falls more squarely into the bucket marked “equities” and is a unique way to differentiate the vast pool of stocks traded daily around the world,” according to research from AGF Investments.
Infrastructure Investing for the Near-Term and Long-Term
The strong, consistent demand for infrastructure has delivered stable, repeatable cash flows to investors. Meanwhile, population growth, aging infrastructure, and constrained government budgets are creating opportunities for the private sector. The high cost of entering the infrastructure business also limits competition or provides a wide economic moat for those already in the field.
There are other benefits offered by GLIF, many of which are relevant now and on a long-term basis, too.
“In fact, infrastructure stocks offer not only many of the same benefits that are often associated with private infrastructure funds, but also greater versatility to gain broad global exposure across multiple sectors and to move in and out of positions more easily,” notes AGF. “As such, they are routinely used as both a substitute for and a complement to less liquid approaches.”
Some market observers believe riskier assets aren’t adequately reflecting the shortening odds of former Vice President Joe Biden defeating President Trump in November. Others assert a Biden victory won’t be as bad for stocks as investors may currently believe. However, Trump may still have some say when it comes to infrastructure.
“Even if listed infrastructure’s growth potential takes time to realize (or worse, falls short of the mark), it can still have an immediate and positive portfolio impact as a risk-mitigator and income-generating investment. Infrastructure stocks have a solid track record of returns, with low and even negative correlations to stocks and bonds, over the past 15 years,” according to AGF.
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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.