Infrastructure is a hot topic in today’s world. Politicians of all stripes and from every country are talking about infrastructure as a stimulus to a soft economy and as a job creator.
Kensington sees infrastructure as a good investment with steady, inflation protected cash flow. Our growing population and economy continues to place new demands on power, transit and other key services. At the same time, much of our core North American infrastructure is over 50 years old and must be renovated or replaced. The cost of these new infrastructure projects runs to several trillion dollars over the next decade, all while Governments have record debt levels and very limited capacity for new spending. This adds up to an exciting opportunity for private investors.
Direct investments in infrastructure assets represent a relatively new asset class for investors; assets that were previously available only to the largest institutional investors. While investors have long had the opportunity to participate indirectly, through listed infrastructure stocks and bonds, these securities trade in the public markets and can perform very differently from direct ownership of the underlying assets. It is therefore not surprising to see more and more institutional and individual investors seeking the secure cash flows and uncorrelated performance of direct infrastructure investments.