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4 benefits for investing in global infrastructure


ginvestment in global infrastructure and funds such as FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA) offer many benefits that investors may not be aware of.

A recent FlexShares blog post revealed that exposure to infrastructure on a global scale may offer more rewards beyond serving as a utility game. One of those benefits is income, which is difficult to achieve given the current low rate landscape.

“Many investors view infrastructure investments as a source of income, which is particularly beneficial in today’s prolonged low interest rate environment,” said FlexShares. “And like real estate, infrastructure tends to benefit from low interest rates because it translates into lower costs and lower debt financing.”

In addition, the city’s discourse on capital markets has focused on inflationary pressures. With the income component of global infrastructure, investors can stay ahead of inflation as prices rise.

“With rising inflation expectations, investors can benefit from the potential of the infrastructure to serve as a hedge against inflation, ”said FlexShares.

Global infrastructure can also be a bouncing game. Some infrastructure sub-sectors were affected during the pandemic, but these same sectors now represent value games with upside potential.

“At the onset of the pandemic, certain infrastructure sectors, such as air transport, seaports, railways and pipelines, were particularly affected. As global economies reopen, these sectors could be on the back burner. point to benefit the most, ”FlexShares continued.

Sectoral and international diversification

Finally, having a global infrastructure can offer ETF investors the potential for diversification. Not only will a fund like NFRA provide investors with uncorrelated exposure to equity markets and interest rate dynamics, the benefits of moving overseas provide an additional layer of diversification.

“Listed infrastructure stocks provide investors with exposure to both equity markets and interest rates, thus offering the potential for the diversification benefits that come with differentiated returns,” said FlexShares.

Overall, the NFRA seeks investment results that generally match the price and return performance, before fees and expenses, of the STOXX® Global Broad Infrastructure Index. The index reflects the performance of a selection of companies which, on the whole, have broad exposure to publicly traded developed and emerging market infrastructure companies, including US companies, as defined by STOXX Ltd. in accordance with its index methodology.

“Investors have long looked to infrastructure stocks for their potential for diversifying portfolios, generating income and responding to inflation,” another Article on FlexShares mentionned. “But investments in infrastructure also historically have unique risks, including sensitivity to regulatory and political impacts, as well as natural disasters. We believe that the key to managing these risks lies in broadening the scope of an infrastructure investment strategy across geographies, sectors and even revenue types. “

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.