Is It Time To Cash In On Infrastructure Funds?

There is a curse: it says, 'may you live in interesting times'

. Certainly for the investment industry that saying could go a long way to describing the climate for financial companies over the past 24 months. From boom to bust and back to boom again, it has been a roller coaster ride the like of which few have ever experienced. Some never recovered. With more uncertainty likely over the next 12 months, investors will still be looking for any safe havens where they can shelter from any storm and many think they have found it in infrastructure funds.

Of all the asset classes worth investing in many feel that these offer the most reliable prospect of sustained returns. At any one time around the world there are countless construction projects in progress. With developing regions such as Africa, Latin America and parts of Asia looking for rapid development over the next few years there is little prospect of supply outstripping demand. In fact, the problem is likely to be reversed. With so many projects competing for finance, existing infrastructure funds are struggling to provide enough capital.

The result has been incredible growth which has seen this grow from a niche sector in the equity market to one of the most attractive alternative investment opportunities around. Small wonder then, that nearly sixty percent of professionals involved in infrastructure funds say they have devoted an entirely separate allocation to the asset class. The one question is: can the boom last or are we facing something of a mirage.

As usual there is a ferocious difference of opinion between various financial experts.

While some believe the hype has been over exaggerated many companies are looking to increase their allocation towards infrastructure funds. For many this represents what they see as a safe harbor as they seek to hedge against the substantive market correction they feel is certain to come before long. Whether it's a new wind farm in the north sea, urban planning in Africa or even Olympic construction investors increasingly see this as an indispensible investment tool that can provide them with good and stable long term returns.

The outlook for infrastructure funds is therefore highly promising, but if the last two years have taught us anything in the world of investments it's that we should always be careful when following the crowd. For the time being and as long as you take advantage of all the sound impartial advice you can muster, then, this represents a very promising option.

by: Dominic Donaldson

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