How would you like to own stock in a company that processes sewage in the Philippines? Not your cup of tea? What if it provides solid long-term returns, above-average dividends and lower volatility than the overall market? Still not convinced? What if it has the potential to offset inflation? Do we have your attention? While these types of infrastructure companies rarely make front-page news, they have the attention of savvy institutional investors who need to fund long-term liabilities and guard against inflation. In an article published in November 2016, Pension and Investments reported that capital raised by unlisted infrastructure funds over the course of the first three quarters of 2016 (45.5bn USD) already exceeded the total capital raised in 2015 (45.3bn USD). This is an increase of 75% compared to a total of 26 bn USD raised just five years ago in 2011.¹

Since most investors cannot afford to buy toll roads or airports, unlisted infrastructure investments are out of their reach. This means that listed equity is the only avenue for exposure to this asset class. The clear challenge for investment professionals is choosing pure infrastructure companies that capture the beneficial characteristics of unlisted infrastructure investments in a diversified portfolio. These characteristics include low business risk, high income, low market exposure and stable rates of return.

The STOXX Global Broad Infrastructure Index is designed to meet these criteria. This new index allows investors to understand the fundamental characteristics and performance track record of infrastructure companies listed around the world. The selection list is drawn from qualified companies in developed and emerging markets.

In the paragraphs that follow, we aim to spotlight the unique investment exposure provided by listed infrastructure companies. Our hope is that this paper will aid in planning and implementing investment decisions.

¹ Global unlisted infrastructure fund raising. Charles Mcgrath, Oct 5, 2016.

Read: Realizing the Promise of Listed Infrastructure Investments