The long-term need for global infrastructure
January 28, 2013
Global infrastructure securities may offer an attractive long-term investment opportunity for certain investors concerned about slow global economic growth.
How are you looking to keep your portfolio moving amid a stalled economic environment?
Several trends support the growth potential of global infrastructure. These include:
- Global population growth. Global population growth is creating demand for new infrastructure. The world’s population reached six billion in 2000 and is projected to reach approximately nine billion in 2050*.
- Need for infrastructure repair. In light of the huge global population growth, existing infrastructure around the world, much of it built more than 50 years ago, is in need of refurbishment or replacement;
- Strong global demand. For instance, infrastructure investment needs for energy, road and rail transport, telecommunications, and water could average 3.5% of world gross domestic product (GDP) per year through 2030, or about US $71 trillion annually*.
- Need for private sector funding. A shortage of capital continues to strain government budgets, the traditional source of funding for new infrastructure projects. Private sector funding is needed, especially in developing countries which depend on improved infrastructure to support their growing economies.
*Source: Organization for Economic Cooperation and Development (OECD), as of October 2012. Most recent data available.
GDP is a measure of all goods and services produced in the country.
According to the OECD, investment in infrastructure spending is expected to increase substantially through 2030, making listed infrastructure a ripe asset class for growth potential in the coming decades.
Source: OECD (2009), Infrastructure to 2030. (Most recent data available).
OECD is a Paris-based international economic organization of 30 countries. Most OECD members are high-income economies with a high Human Development Index and are regarded as developed countries. The Human Development Index is an alternative to simple money metrics. It is an easy-to-understand numerical measure made up of what most people believe are the very basic ingredients of human well-being: health, education, and income. It is used in a number of countries as an official government statistics.
Views expressed were current as of December 2012, are subject to change, and may not reflect the manager's current views.
Carefully consider the Funds' investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds' prospectuses and their summary prospectuses, which may be obtained by visiting the fund literature page or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
Investing involves risk, including the possible loss of principal.
International investments entail risks not ordinarily associated with U.S. investments including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.
Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.
Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors. Because the Fund concentrates its investments in securities issued by companies principally engaged in the infrastructure industry, the Fund has greater exposure to the potential adverse economic, regulatory, political, and other changes affecting such entites.
“Nondiversified” funds may allocate more of their net assets to investments in single securities than “diversified” funds. Resulting adverse effects may subject these funds to greater risks and volatility.
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