Listed Infrastructure Explained
By: Hang Gao, Grant Wang, Robert Yan and Bill DeRoche • June 16, 2023
Making the case for investing in the backbone of the economy through publicly-traded equities.
One can think of investing in infrastructure as investing in the backbone of an economy. Roads and bridges, oil and natural gas pipelines and utilities all support economic growth. These are still the mainstays of infrastructure, but the past few years have changed just about everything. Today, the cell towers that support mobile communication, the cloud that stores much of our data, and the renewable energy sources that deliver our electricity herald a new era in infrastructure investing.
Infrastructure investments can be made either directly or through a listed infrastructure stock. In direct investing, equity or debt is backed by a specific infrastructure asset or project; investing in listed infrastructure refers to exposure to stocks of publicly traded companies that either operate or manage an infrastructure asset. Institutional investors such as pension funds have typically been direct investors, because their time horizon is long and their liquidity needs are low. In their case, it makes sense to directly invest in an asset or project. Many retail investors, however, want a shorter time horizon and higher liquidity needs, so listed investing is often a better option.
Whether the infrastructure investment is direct or listed, the potential benefits in comparison to the broad equity market are similar: diversification, lower price volatility, steady expected cash flow and a potential inflation hedge.
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AGFiQ Global Infrastructure ETF was renamed AGF Systematic Global Infrastructure ETF on January 27, 2023. Effective January 27, 2023, AGF Investments LLC is a subadvisor to AGF Systematic Global Infrastructure ETF.
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Publication date: June 16, 2023