Infrastructure offers you lower-risk gains

Article Excerpt

Companies that own and operate unique infrastructure assets have characteristics, such as stable profits and cash flows, that can make them attractive. And investors looking for exposure to these assets have several publicly listed options available, including exchange-traded funds. Notably, indexes that track the performance of listed infrastructure companies have performed better than the broad global equity markets over the long term and also had similar or lower volatility than the markets. What are infrastructure assets? Infrastructure provides the physical backbone that delivers essential services to the public. This includes gas transmission, water, electricity, railroads, ports, communications infrastructure, and toll roads. Infrastructure can be categorized into two areas: regulated assets and user-pay assets. With regulated assets, such as electric or gas utilities, the regulator sets the profit that a company should earn on its assets. The regulator may also take into account inflation, which means price increases are often linked to inflation and the prospect of rising interest rates. With user-pay assets, a company’s revenue is…

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