Listed infrastructure is likely to perform well in a ‘goldilocks’ environment
Listed infrastructure has delivered proven performance, despite commodity prices falling sharply.
As investors look to position their portfolios for growth in 2015, we’ve been sitting down with our clients to explore the role that global listed infrastructure securities can play in achieving their objectives. As a declining commodity backdrop fades (the price of crude oil is slowly stabilising), our conversations indicate that both retail and institutional investors are generally more positive.
Despite crude oil being down almost 50%, listed infrastructure as an alternative asset class, delivered gains of more than 20% in 20141. This proven performance during a period where commodity prices were falling sharply is testament of infrastructure’s low correlation to crude oil and the diversification benefits that exist when investors add global infrastructure securities to their portfolio.
We know that market sentiment can change rapidly, and moving into March, we are fielding more questions from investors about the implications of European and Japan quantitative easing programs on infrastructure. My view is that infrastructure securities along with other select assets such as real estate investments trusts are likely to perform well during times of quantitative easing. This is because low interest rates and low but positive growth creates a ‘Goldilocks’ – not too hot, not too cold – environment for long duration and high-yielding assets.
1Source: AMP Capital, Bloomberg, Dow Jones Brookfield Global Infrastructure Net Accumulation Index (Hedged AUD), one-year return as at 30 January 2015
While every care has been taken in the preparation of this information, neither AMP Capital Investors Limited (ABN 59 001 777 591 AFSL 232497) nor any member of the AMP Group make any representation or warranty as to the accuracy or completeness of any statement in it including without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This content has been prepared for the purpose of providing general information only, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this content, and seek professional advice, having regard to their objectives, financial situation and needs. © Copyright 2015 AMP Capital Investors Limited. All rights reserved.
Content sourced from Cuffelinks and livewire does not represent the views of AMP Capital or any member of the AMP Group.