We believe infrastructure investment can help institutional investors reach their goals. Some of the potential benefits include attractive risk-adjusted returns, low correlation to other asset classes, stable cash yield, long-lived physical assets, barriers to entry for competitors, and a measure of inflation protection.
Investment Value Proposition Thesis
Global demand for infrastructure and a persistent low-yield environment make private investment in infrastructure an attractive risk-adjusted opportunity. Within the context of a global consensus for sustainability, long-term investors can maximize value by delivering sustainable infrastructure solutions, which may reduce risk, and enhance political and social feasibility. Infrastructure may provide attractive risk-adjusted returns with a measure of inflation protection.
Value and Sustainability Converge in the Long-Term
License to Operate
Consistent, transparent and verifable sustainability may enhance political and social feasibility of projects, enhancing access for projects and leading to planning and operational efficiencies.
A commitment to sustainability may mitigate the risks of costs related to environmental remediation and decommissioning.
As the following chart illustrates, infrastructure investments may provide attractive returns, often with less volatility than conventional debt and equity vehicles.
Infrastructure Investments Have Provided Attractive Returns, Often with Relatively Low Volatility
Date Range 2003-2018*
Source: Bloomberg, Guggenheim Investments. Data as of 12.07.18. *Note: data on infrastructure debt is since 2006. The index for U.S. infrastructure debt is the Markit iBoxx USD Infrastructure Index, the index for European infrastructure debt is the Markit iBoxx EUR Infrastructure Index. Europe Infrastructure Equity is represented by the Dow Jones Brookfield Europe Infrastructure Index. North America Infrastructure Equity is represented by the Dow Jones Brookfield North America Infrastructure Index. EM Infrastructure Equity is represented by the Dow Jones Brookfield Emerging Markets Infrastructure Index. US IG is represented by the Barclays US Aggregate Bond Index. US HY is represented by the Barclays US High Yield Index. US Equity is represented by the S&P 500. Global Equity is represented by the MSCI ACWI. Commodities is represented by the Bloomberg Commodity Index. EM Debt is represented by the J.P. Morgan EMBI Global Index. EM Equity is represented by the MSCI Emerging Markets index. Japan Equity is represented by the Nikkei Index. Europe Equity is represented by the Euro Stoxx 600 index. Europe IG is represented by the Barclays Euro-Aggregate Index. US Real Estate is represented by the Dow Jones U.S. Real Estate Index. Global Real Estate is represented by the Dow Jones Global ex-US Select Real Estate Securities Index. Cash is represented by the BAML US 3-Month Treasury Bill Index. Arctic Infrastructure figures are calculated by Guggenheim Partners, and is a weighted composite of North America, Europe, and emerging markets. Past performance does not guarantee future returns.
Guggenheim Investments. All rights reserved.
Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Fund Management (Europe) Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management.