Infrastructure Funds

Infrastructure funds invest in public infrastructure assets. These assets are the essential goods and services of our economy utilised by companies and individuals during their ordinary activities.

Some examples of infrastructure assets include: 

  • Transportation such as rail assets, toll roads, or airports 
  • Communications such as broadcasting towers, cables, and telephone switching facilities 
  • Materials handling such as ship and train loading facilities 
  • Utility facilities such as electricity power lines and oil/gas pipelines 

Infrastructure funds are managed by specialist fund managers, who make the investment decisions on behalf of the fund, and generally seek diversification across multiple assets, industries or geographical regions.

The investment opportunities the managers invest in may arise from government privatisations or from the private sector. Most Infrastructure Funds are structured as a stapled security.

As infrastructure assets are made up of essential goods and services, revenues from these assets are not considered volatile, and infrastructure is generally regarded as a stable asset class.

Because of the nature of infrastructure assets, movements in their prices are not closely correlated to price movements of other asset classes.

The essential nature and the competitive advantage of infrastructure assets means that income tends to be predictable.

Like property trusts, infrastructure funds usually pay regular distributions, which can include a tax-deferred component. See Tax Deferral for an example.

Infrastructure funds may be appropriate for investors seeking:

  • A investment with low correlation to price fluctuations in other asset classes
  • Diversification into infrastructure assets
  • An tax effective income stream with tax deferred components
  • Stable earnings from essential goods and services
  • Access to a unique investment class