On a scale from “growth opportunities” to “crash protection”, where would you put infrastructure?
Infrastructure shares remain shares and are, of course, impacted by stock market movements. They are not completely riskless. But, in contrast to the wider equity market, they are significantly more defensive because demand is fairly predictable and stable. Let’s stay with the examples given earlier: electricity and gas. We always need them whether or not we are in a recession or a boom. And we only ever totally avoid the tollroad if, because of a pandemic, we have all been ordered to stay home and work in home office. Historically, infrastructure companies have grown consistently and strongly not least due to long-term structural trends which promote growth. To sum up, I see infrastructure as a defensive add-in to an equity portfolio because they do well in a rising market and typically lose significantly less than the market as a whole when prices are sinking.
T. Harv Eker said something along the lines of: “Don’t wait to invest in infrastructure – invest in infrastructure and wait”! — Are infrastructure investments typically only for long-term investors? Is it already too late to jump aboard?
I like the quote. The right timing is not an issue when it comes to infrastructure stocks. Infrastructure projects are long-term and just keep coming. Over the next decades, huge amounts of investment will be needed in order to repair and renovate existing infrastructure to keep up with requirements. The move towards sustainable energies will also remain center-stage and will be keeping infrastructure companies’ order books full. It is definitely not too late to get on board this slow, but constantly moving train.