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UBS Q-Series ® "Infrastructure & Utilities": Asset bubble, structural change or fundamental re-rating?

London Media Releases EMEA

Over 10 years the global infrastructure and utilities (I&U) sector has outperformed equities and government bonds. New research from UBS suggests this developing asset class will be among the biggest themes in financial markets over the next decade and beyond.

UBS has published a new research series on the Infrastructure & Utilities (I&U) sector. The series comprises 11 research reports published globally across 7 different sectors. Over the last 10 years the global infrastructure and utilities (I&U) sector has outperformed equities and government bonds in total returns. The main Q-Series ® report in the series looks at the drivers of this outperformance.

The Q-Series ® concludes that outperformance of the I&U sector over the past decade has been driven by a secular decline in interest rates, coupled with a growing interest in what is a developing asset class. It states that underlying profitability has helped, as well as a major structural shift occurring in the sector. The report argues that demand for infrastructure investment is likely to be driven by attractive forecast risk adjusted returns, asset managers wanting to match long-term liabilities with stable long-term cash flows, and the ageing population looking for defensive, high-yielding investments to underwrite retirement incomes. The supply of infrastructure investment will be driven by governments playing catch-up for historic under-spending and also meeting the needs of future population growth. The reports authors expect that a growing proportion of the capital to fund this will come from private sources as governments move away from public funding in order to focus health, education, welfare and defence spending.

The report suggests the ongoing globalisation and securitisation of the Infrastructure & Utilities sector will be one of the major trends in global capital markets over the next decade. The author's site World Bank estimates, stating that the total value of Infrastructure & Utilities globally is US$17 trillion. With only 14% of these listed, vs 35% for Real Estate, UBS believes there are excellent opportunities.

A full copy of the Q-Series ® report or any of the 10 companion notes can be obtained by contacting your regional media relations officer.

Contacts:

Richard Morton, Media Relations, London

Tel. +44-20-7568 9982

Allison Chin-Leong, Media Relations, New York

Tel. +01-212-882-5693

Anja Schlendstedt, Media Relations, Germany

Tel. +49-69-1369-8303

Graeme Harris, Media Relations, Canada

Tel. +01-416-345-7050