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For Professional Clients and, in Switzerland, for Qualified Investors only. In Israel for Sophisticated Investors only.
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IDEAS AND KNOWLEDGE TO INSPIRE YOUR INVESTMENTS THINKING
28 April 2022

Addressing an urgent need for infrastructure spend

After many years of unsuccessful infrastructure spending legislation in the US, we finally saw a breakthrough in November of last year. The government’s US$1trn+ infrastructure plan includes approximately US$550bn1 in new spend targeting traditional infrastructure areas such as roads, bridges, rail, the power grid, broadband and water. When paired with the €1trn European Green Deal, this is a secular step up in infrastructure spend. Additionally, supply-chain issues are not expected to affect infrastructure. These generational assets are, for the most part, already established and collecting rents. These businesses are generally domestically oriented and thus insulated from current supply-chain concerns.

 

Why do investors look to infrastructure? We believe they seek three things: defensive business models, inflation protection and income. The last two years tested and proved both the resilience of these business models and the defensive nature of non-transport businesses. While slowing global travel affected many transport organisations such as airports and toll roads, the balance of the infrastructure sector remains relatively unscathed despite current Covid-19 headwinds. Additionally, current inflationary pressures, constrained equity and fixed-income asset yields and an increase in demand for income by aging demographics are all creating what we believe is an increasingly compelling case for investment in infrastructure.

 

Jim Lydotes, portfolio manager, Newton Investment Management.

 

Doc ID: 961368

 

1 CNBC.com. ‘Here’s what’s in the $550 billion bipartisan infrastructure deal’, 29 July 2021.

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Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Managers Limited (BNYMFM), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds.

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