As the name tells, infrastructure funds invest in public infrastructure assets. Infrastructure funds are part of a mutual fund category called thematic funds. While sectoral funds invest in particular sectors like information technology, power, metals, oil and gas, etc, thematic funds invests in themes like infrastructure, consumption-led categories like the retail industry and outsourcing companies.
What is infrastructure assets?
- Transportation – roads, airports, ports, construction
- Materials handling – ship and train loading facilities
- utility facilities – electricity power lines, oil/gas pipelines, power equipment, coal, mining, steel, water supply
- communication – broadcasting towers, telephone switching facilities, fiber optic cables etc.
- Social projects – school, hospital
What is the key features of infrastructure funds?
- infrastructures assets are made up of economy necessity, thus it is the most essential asset class in a nation. So the income tends to be predictable
- low correlation to other asset class
- not restricted to a few particular sectors, infrastructure funds covers several sectors like power utilities, power equipment, and construction companies.
Who is suitable to invest in infrastructure funds?
- investor who wants more diversification of their investment portfolio
- investor who wants stable earnings from essential goods and services
- investor who wants access to another unique asset class
- investor who do not seek quick returns, infrastructure projects by their very nature have a long gestation period.
Availability in Malaysia?
Hwang DBS Global Infrastructure Fund
If you have any experience with infrastructure funds, please share in the comment. Happy investing.
For further details, The Skilled Investor wrote a lengthy article about this asset class.