The next big investment opportunity may be hiding in plain sight

Alex Burke, Senior Writer, No More Practice Education

Your Netflix account doesn't just keep you up to date on the latest Black Mirror episode - it also represents the front-end of a major new infrastructure investment opportunity.

According to Statista research, mobile data usage will rise to 701,000 petabytes by 2021 - up from 43,000 in 2015. As the world becomes increasingly reliant on the internet - and mobile usage in particular - "data" is being seen less as a measure of information and more a public utility, like water or gas.

The global need for connectivity

For that reason, the technology, real estate and energy underpinning the data boom is now a critical global infrastructure asset. Remote storage requires data centres and server farms, which in turn require significant amounts of electricity, and the very literal "poles and wires" that transmit this information need to be regularly updated to accommodate rising demand (and newer communications protocols).

For example, consider the progression from the wireless communications technology 3G to 4G and 5G. To facilitate this change, the equipment on cell phone towers needs to be upgraded and replaced - and if you're familiar with Moore's law at all, you'll know this cycle of change (and the expenditure involved from the companies managing this infrastructure) will only happen more frequently in the future.

As another example, recall how quickly we progressed from VCRs to DVD players and now streaming services: back when you first saw the Matrix it would've been inconceivable to be able to instantly stream it, in high-definition, on your television. Now, thanks to the growth of data infrastructure, it's available on Netflix at the press of a button.

An evolving investment

The case for investors, then, is quite clear: listed companies operating in the data space are at the vanguard of a new and rapidly-expanding type of infrastructure asset. They're directly responding to the ubiquity of demand for data and connectivity, and the assets they build and maintain require constant reinvestment to meet that demand.

It's for all these reasons that Jeremy Anagnos, Chief Investment Officer for the UBS Clarion Global Infrastructure Securities Fund considers data growth to be the "next major commodity".

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