The basic physical systems of a business or nation. Transportation, communication,
sewage, water and electric systems are all examples of infrastructure. These systems
tend to be high-cost investments, however, they are vital to a country’s economic
development and prosperity. Infrastructure projects may be funded publicly, privately
or through public-private partnerships.
Sometimes private companies will choose to invest in a country’s infrastructure
development as part of a business expansion effort. For example, an energy company
might build pipelines and railways in a country where it wants to refine petroleum.
This investment can benefit both the company and the country.
Infrastructure is also an asset class that tends to be less volatile than equities
over the long term and generally provides a higher yield. As a result, some companies
and individuals like to invest in infrastructure for its defensive characteristics.
Individuals and institutions can invest in infrastructure through infrastructure
funds and can even choose specialized funds, such as those that invest in
transportation infrastructure or water infrastructure.