Investment Strategies – Global Infrastructure
PGS Smart Beta Indices
PGS has developed smart beta indices over the past two decades, starting with our Parker FX Index. In 2009 we developed the PGS MLP Top 20 Trax, an equally weighted index of the 20 MLPs with the fastest distribution growth over the past 8 quarters. Most recently we have developed a global listed infrastructure index, PGS GIS.
PGS Global Listed Infrastructure Index – Smart Beta
The PGS Global Infrastructure Index (GIS) is a fundamental, rules-based smart beta index designed to be more diversified and include more sectors than current infrastructure indices. The strategy includes 11 sectors that are equally weighted: Airports, Energy C-Corps, Communications, Diversified & Logistics, Miscellaneous, MLPs, Ports, Railroads, Power, Renewable Power, and Water. The investment objective is to participate in the capital appreciation, income, dividend growth, and inflation protection afforded by many infrastructure equities. There is exposure to both developed and emerging markets, approximately 95.7% and 4.3%, respectively.
Case for Global Infrastructure Investment
Privatized infrastructure assets generally have improved efficiency, profitability and maintenance compared to government-owned and managed assets. Listed global infrastructure adds diversification to both domestic and global portfolios. Listed global infrastructure has been defensive during times of equity market turmoil, although past performance is not indicative of future results.
Defining Global Infrastructure
Listed infrastructure equity companies often provide attractive current yield, growing dividends/distributions, inflation protection, liquidity, and ownership of long-term assets providing essential services that generate stable cash flows.
- Companies enjoy limited competition, high barriers to entry, and often long-term contracts with an inflation escalator.
- Privatization of infrastructure assets continues as governments are short of capital, creating opportunities for investors seeking these assets.
- Since 1990, approximately US$900 billion of state-owned assets have been sold in OECD countries, about 63% of which is infrastructure.
PGS divides classifies infrastructure under the following categories: Utilities, Communications, Transportation, Energy Transportation & Storage, Diversified & Logistics, and Miscellaneous.
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