Global infrastructure investing and funds like the FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA) offer many benefits investors may not be aware of.
A recent FlexShares blog post revealed that getting infrastructure exposure on a global scale can afford more rewards beyond serving as a utilities play. One of those benefits is income, which is hard to come by given today’s low-rate landscape.
Additionally, the talk of the town in the capital markets has been inflationary pressures. With the income component of global infrastructure, investors can stay a step ahead of inflation as prices rise.
Global infrastructure can also be a rebound play. Certain sub-sectors of infrastructure were impacted during the pandemic, but these same sectors now represent value plays with potential upside.
Sector and International Diversification
Lastly, getting global infrastructure can offer ETF investors diversification potential. Not only will a fund like NFRA offer investors uncorrelated exposure in equity markets and with interest rate dynamics, the benefits of moving abroad offers an extra layer of diversification.
Overall, NFRA seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® Global Broad Infrastructure Index. The index reflects the performance of a selection of companies that, in aggregate, offer broad exposure to publicly-traded developed- and emerging-market infrastructure companies, including U.S. companies, as defined by STOXX Ltd. pursuant to its index methodology.
“Investors have long looked to infrastructure stocks for their potential to diversify portfolios, generate income and respond to inflation,” another FlexShares article said. “But infrastructure investments have also historically come with unique risks, including sensitivity to regulatory and political impacts, as well as natural disasters. We believe the key to managing these risks lies in broadening the scope of an infrastructure investing strategy across geographies, sectors and even revenue types.”
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