In the near term, global industrial stocks can benefit and deliver portfolio returns. We see longer-term portfolio opportunities in infrastructure, automation and robotics, and greentech. Infrastructure-linked assets may also help achieve financial goals thanks to long-term cashflows and inflation mitigation.
Infrastructure can benefit from upgrades, net-zero investment, and government support.
- Emerging Asia needs to invest USD 1.7 trillion in infrastructure each year from 2016 to 2030 to remain competitive, according to the Asian Development Bank.
- CIO expects about USD 40–50tr of global energy transition investments in the years 2021–30, in support of net-zero efforts.
- Policies like the US Inflation Reduction Act and EU Green Deal Industrial Plan demonstrate government support for infrastructure.
We see return potential in industrials, greentech, and automation and robotics.
- Global industrials can benefit from a robust next capital spending cycle, inlcuding in defense, mining, and oil and gas.
- Greentech companies are exposed to infrastructure spending on the energy transition, decarbonization, and energy efficiency.
- We estimate the overall automation and robotics market to grow to USD 334bn in 2024, from USD 269bn in 2022.
Long-term exposure to infrastructure can help achieve financial goals.
- High barriers to entry and the monopolistic positioning of many infrastructure assets make them less sensitive to the economic cycle.
- Since 2003, infrastructure has typically performed best when global inflation has been high (based on Cambridge Associates Infrastructure Index data).
- Infrastructure's long-term cashflows may help investors better match assets with liabilities, especially beyond their lifetime.
Did you know ?
The International Energy Agency (IEA) estimates that the global market for key mass-manufactured clean energy technologies will reach a value of about USD 650bn by 2030, more than triple today's level.
Infrastructure and related investments can help investors grow their wealth, diversify portfolio returns, and better match long-term liabilities to assets. We see value in infrastructure (including greentech) and selected long-term themes including automation and robotics. On a tactical horizon, we like global industrials as a means to express this theme.
Main contributors - Matthew Carter, Vincent Heaney
Original report - Can infrastructure add value to my portfolio?, 14 July 2023.