Rebuilding America: The Coming Opportunity In Infrastructure

It’s hard for most stakeholders to get excited about replacing an aging bridge.

Q4 hedge fund letters, conference, scoops etc

Chaotic construction can disrupt the flow of traffic for many years, while annoying many of the local residents. Even worse, such projects usually go over budget, ultimately costing millions or even billions in taxpayer dollars.

At the end of the day, you have a new and improved bridge – but was it really worth all the hassle?

Rebuilding America

It’s not always easy to see short-term ROI in replacing aging infrastructure, especially when there are many other pressing challenges for society to tackle.

However, perpetually kicking the can down the road eventually leads to a situation that works in nobody’s favor. If streets, highways, rail, subways, airports, and bridges are all crumbling, the economy could eventually follow suit.

Rebuilding America Infrastructure

According to the latest report card by the American Society of Civil Engineers (ASCE), infrastructure in America barely gets a passing grade with a mark of D+.

Here is how things break down, by specific type of infrastructure:

Infrastructure Type Grade   Infrastructure Type Grade
Rail B Wastewater D+
Solid waste C+ Roads D
Bridges C+ Aviation D
Ports C+ Dams D
Energy D+ Drinking water D
Hazardous waste D+ Inland waterways D
Schools D+ Levees D
Public Parks D+ Transit D-

The situation is grim – and the organization says that the country needs to spend an extra $2.1 trillion by 2025 to avoid making the situation worse.

Why Investors Should Care

Infrastructure is decidedly unsexy for investors.

However, it does come with some major benefits – in fact, JP Morgan Asset Management says that infrastructure investments tend to have low correlation with other asset classes, helping portfolio diversification. In addition, infrastructure is often protected from inflation, while providing a high yield and stable cash flows.

Here are some ways that regular investors can get access to the infrastructure sector:

  • Materials stocks: Millions of tonnes of cement, concrete, steel, and other materials will be needed
  • Construction and engineering stocks: These are the companies that will get the contracts to rebuild America
  • Heavy machinery manufacturer stocks: Heavy machinery will be needed to get construction jobs done
  • Infrastructure ETFs: Alternatively, there are thematic ETFs that build their funds around infrastructure

How will you try to play the coming infrastructure boom?

Article by Visual Capitalist


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