24 Jun 2025 - Why invest in infrastructure

Why invest in infrastructure

Magellan Asset Management

May 2025

What is infrastructure?

Investing in infrastructure is about investing in the companies that provide essential services to society and that generate predictable long-term earnings. These assets include transportation, energy and utilities, communications and social infrastructure businesses.

Why invest in Global Listed Infrastructure?

Investing in global listed infrastructure offers unique advantages for investors. With over 350 infrastructure and utility companies available on global stock markets, these investments have the potential to provide reliable cash generation, inflation protection, and defensiveness in declining markets.

Why invest with Magellan?

Definition matters

Magellan's infrastructure universe is more strictly defined than standard benchmark indices.
 

Predictable earnings:

Magellan limits its global listed infrastructure investment universe to approximately 130 to 140 stocks within regulated utilities, transport and social infrastructure assets that it believes can provide investors with predictable, through-the-economic-cycle, inflation-linked returns.

 Cashflows are reliable:

Magellan excludes stocks from the benchmark whose earnings have material exposure to competition, movements in commodity price or unacceptable sovereign risk.

Many prominent infrastructure benchmarks include companies whose risk and return profiles are virtually indistinguishable from broader equities, therefore failing to provide the desired diversification. Assets exposed to sovereign risk, competition risk, and commodity price risk (which can lead to volatility and unpredictability in returns) exhibit characteristics more akin to equities rather than true infrastructure assets. Magellan's strict definition of infrastructure focuses on companies with stable demand profiles and reliable cash flows, which have the potential to provide enhanced diversification and long-term stability.
 

Why global listed infrastructure deserves a place in your portfolio

Despite market fluctuations and even during times of economic downturns and geopolitical uncertainties, investing in infrastructure can provide attractive opportunities for investors due to its essential nature and stable returns.

• when you need it: Infrastructure assets typically exhibit low correlations with other asset classes, thereby reducing overall portfolio risk and enhancing diversification. These benefits are often most apparent in times of economic weakness or geopolitical uncertainty. 
• stability: Infrastructure assets, such as utilities, transportation, and communication networks, often have stable, long-term revenue streams.
• generation: Infrastructure assets often produce reliable and steady income, offering the potential for consistent returns across various economic cycles.

With the increasing global demand for infrastructure development, the sector is positioned for long-term growth, making it a compelling choice for investors seeking stability and future potential.

Funds operated by this manager:

Vinva Global Alpha Fund - Active ETF (ASX: V1AC) , Vinva Australian Equity Fund , Vinva Global Equity Fund , Vinva Australian Alpha Extension Fund , Vinva Global Alpha Extension Fund - Class A , Magellan Infrastructure Fund , Magellan Global Opportunities Fund No.2 , Magellan Infrastructure Fund (Unhedged) , Magellan Core Infrastructure Fund , Magellan Global Opportunities Fund Active ETF (ASX:OPPT)

Important Information: 

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