NEW! SATRIX GLOBAL INFRASTRUCTURE ETF
Infrastructure investment is ongoing and necessary worldwide. These assets, traditionally funded by governments, provide essential services for economic growth, and range from oil and gas pipelines, utilities, communications, transportation infrastructure and more. To modernise and build new infrastructure projects as the global population increases means funding now comes from many sources and is not just the remit of the state.
The new Satrix Global Infrastructure ETF tracks the FTSE Global Core Infrastructure Index, offering investors exposure to worldwide listed companies involved in the FTSE Russell-defined “core” infrastructure activities which involve the development, ownership, operation, management and/or maintenance of structures or networks. These are used for the processing or moving of goods, services, information/data, people, energy or necessities from one location to another. To be included in the index, companies must derive a minimum of 65% of their revenue from FTSE Russell-defined core infrastructure activities.
This global ETF will list on the JSE and investors will access it in South African Rand. Satrix will replicate the index by investing in the iShares Global Infrastructure UCITS ETF. The underlying iShare ETF distributes income on a quarterly basis, therefore the Satrix Global Infrastructure Feeder ETF will distribute all income received.
ABOUT THE INDEX
THE CASE FOR INVESTING IN GLOBAL INFRASTRUCTURE
Increasingly investors are looking for alternative sources of portfolio returns. Investing in real assets fits this requirement by offering the potential for higher yields, stable returns and a hedge against inflation. Infrastructure investing is an investment in real assets and fulfils the alternative returns mandate whilst also building essential services societies need to operate, such as bridges, roads, highways, sewage systems, airports, education facilities, water facilities or oil and gas pipelines. Simply put infrastructure investing grows and maintains utilities, communications, transportation infrastructure and more in an economy.
Increased and focused infrastructure investment globally is what will see economies transition and thrive in our new world of sustainability and resilience.
Resilient infrastructure is essential for a healthy economy. The Global Infrastructure Hub set up the G20 to support them in developing and implementing their global infrastructure agenda. They estimate that $94 trillion needs to be invested around the world by 2040 to maintain and grow infrastructure. Whilst governments, especially in developed economies, have committed to large spends and with a focus on "greening" their economies, Covid has put an obvious spanner in these plans. This is where private funding needs to, and can, step up as the opportunities are plentiful and robust.
WHY INVEST IN INFRASTRUCTURE?
Infrastructure spend is a proven method to stimulate economic growth post economic shocks. Currently not only are global economies ‘in shock’ but interest rates are also at decade lows which makes the environment very conducive to infrastructure investing success.
These investments also tend to be stable, well-funded and well thought through, delivering lower volatility returns.
Listed infrastructure has a lower correlation to traditional listed equity. A globally diversified ETF serves to further magnify these traits as any industry concentration risk is diluted through investment in multiple geographies and regulatory regimes.
These assets can offer stable and predictable cash flows supported by long term contracts. They often have monopolistic characteristics and high barriers to entry, which provides an additional layer of safety and stability in the return profile.
STABLE RETURNS AND HIGH YIELDS
Global listed infrastructure has historically offered an attractive income component as part of the overall total return. Tight regulations often see revenues locked in through long term contracts or regulatory frameworks which tend to be inflation adjusted, thereby providing a hedge against inflation.
Infrastructure investment is ongoing and necessary worldwide. Public-private partnerships, which are essential to seeing these projects succeed, tend to ensure the projects are delivered on time and to budget. That growth then creates a need for further infrastructure spend creating an investment cycle.
Demand for infrastructure tends to grow in line with GDP, demographics and over time. Because infrastructure assets engender economic growth and offer essential services, demand tends to be very stable. Tight regulation and increasing government support for private investment into these stable projects makes them very attractive for both funders and investors alike. Offering resilient and lower correlated returns, we believe infrastructure investing should form part of a well-diversified, long-term portfolio.
HOW TO ACCESS
Investors are invited to participate in the IPO which opens on Monday 23 August 2021. Investors can access the Satrix Global Infrastructure ETF via SatrixNOW.co.za, which has no minimum investment amount.
If you don't have an account yet you can register here.
POSTED : 23 AUGUST 2021