Investment in infrastructure has grown in popularity over the years, but what does it actually mean? Essentially, infrastructure investment refers to the basic systems and services that a country needs to function, and includes energy, transportation and communication networks. So, it includes the roads you drive on, the airports you fly to and from, and the mobile phone masts that enable us to receive and make calls. These infrastructure systems, which require large initial investments, are essential for enabling productivity in any modern economy.
As you would imagine, capital outlays for these infrastructure projects can be considerable, prompting financially constrained governments to turn towards the private sector to provide funding.
Infrastructure is generally regarded as a defensive asset class, which has a low correlation to other assets. Some companies and individuals like to invest in infrastructure funds for their defensive characteristics, such as funds involved in transportation or water infrastructure.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
