Investing in infrastructure

29th March 2012

"Infrastructure investment as a theme still remains relatively new to the market of Unit Trusts and Open Ended Investment Companies and is likely to become more prominent in the ensuing years.

"As an investment theme it has a strong long-term argument, particularly given the current continuing economic global slow down. The focus in many countries around the world is on the stimulation of economic growth and where better for governments to direct stimulus packages than on improvement to their internal strategic assets like road, rail, sea ports, gas, electric and water utilities. In regions like China this is likely to mean new facilities, where as in the US and Europe, it is likely to result in upgrading current facilities and the improvement of their efficiency.

"By the very nature of businesses involved with these key services, the companies are naturally seen as being defensive and mature, suggesting reasonable levels of dividends and dividend growth. This is further aided by high barriers to entry, strong pricing power, sustainable growth and predictable cash flows making the asset class a relatively safe haven in an uncertain financial world.

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