Underinvestment in global infrastructure has been "huge", and with governments around the world crying poor, it will fall to the private sector to fill the gap, according to 4D Infrastructure.
Speaking to InvestorDaily, 4D Infrastructure global equity strategist Greg Goodsell pointed to a 2014 B20 report that estimated between US$60 trillion and US$70 trillion will need to be spent on infrastructure by 2030.
“Over the past 30 years, governments around the world have underspent chronically on infrastructure,” Mr Goodsell said.
Before 2000, government was spending money elsewhere, while following the GFC, developed nations needed to bail out their banks and stimulate the economy, he said.
Governments are also “cash constrained” as they seek to get their budgets under control, Mr Goodsell added, and as a result, it is natural for private money to come in to fill the void.
The global listed infrastructure sector is worth approximately US$2.5 trillion, he said.
If just 10 per cent of the US$60 trillion in infrastructure spending, which the B20 estimates is needed by 2030, is implemented in the listed market, the sector could “double or triple” over the next few decades, he said.
4D Infrastructure, a part of the Bennelong Funds Management suite of boutiques, began operating in March 2016. The fund is competing in a market with around 12 other fund managers in Australia in a sector worth between $50 billion and $60 billion, according to Mr Goodsell.
There is plenty of room for other managers in the $2.5 trillion global listed infrastructure space, he added – contrasting it with the $2 trillion Australian equities sector where there are between 150 and 160 players.
4D Infrastructure's point of differentiation (as opposed to that of, say, Magellan’s Infrastructure Fund) is that it invests in emerging markets, he said. The firm is looking to target the Asian emerging middle class which will be a “powerful force” over the next decade.
“As people [in emerging markets] start to have more serious income that they can spend, it will drive consumption in travel, which will drive tollways and airports. It will also force governments in these regions to just build better infrastructure," Mr Goodsell said.
The Chinese government has taken enough measures to avoid a debt crisis, says Spectrum Asset Management – at least in the short term. ...
More affluent investors are not interested in standalone automated advice services, according to a new survey by GlobalData. ...
Nick Trueman has been appointed head of global investment management services at T. Rowe Price for Asia-Pacific, succeeding Scott Keller. ...