Infrastructure will be the biggest winner of US election

Infrastructure will be the biggest winner of US election

Regardless of who wins next week's US presidential election, investors will benefit from a greater scope to invest in infrastructure, according to Jamie Ware of Churchill Investments.

Hillary Clinton has announced a $275 billion five-year plan to build roads, bridges, airports and energy infrastructure, a figure that Donald Trump has since promised to double.

In the UK, many are expectant that the Chancellor Philip Hammond's autumn statement on November 23rd will also announce a large infrastructure spend too. 

Ware, managing director at Chuchill Investments, said such opportunities were one of the reasons his firm had been shifting traditional distribution income funds with 60 percent fixed interest and 40 percent equities into funds such as the Newton Multi-Asset Income fund which invests heavily in a range of infrastructure companies.

He said a single allocation to an infrastructure manager would be too specialist for individual investors and that a multi-asset fund such as Newton's could be nimble in how it bought and sold the asset class.

The potential for much greater government spending on infrastructure is also being highlighted by specialist manager Rare Infrastructure, which has highlighted five reasons for investors to use infrastructure to provide income.

RARE Infrastructure’s co-chief executive Nick Langley, estimates the market will double in size from US$50 trillion to $110 trillion over the next 15-20 years as governments use private capital to expand or upgrade existing transport and energy networks.

A key reason for this growth will be the pressure for governments to build greater amounts of renewable energy infrastructure.

Langley also cites the uncorrelated returns infrastructure provides, in particular a smaller downside than equities. 

In addition, he says infrastructure can provide inflation linked returns with a greater uplift than fixed income due to the greater risk levels taken.

Finally, Langley lists the potential for infrastructure to offer stable, growing and forecastable cash flows, for example from investing in transmission and distribution orientated infrastructure businesses.