With holiday shopping well underway, consumers won’t be the only
ones bearing the brunt of inflationary pressures this season. As
economies reopen and countries emerge from the pandemic, supply
chain disruptions are also having an impact on retailers and the
prices of everything from cars to furniture and household
On the surface, rising prices and supply shortages may seem unsettling, but in the eyes of policymakers, all of this is short-lived. As inflation continues to overstay its welcome, is there a way for investors to soften its impact?
Investments in real assets such as listed securities of real estate and infrastructure companies are a great way to help mitigate adverse inflation impacts. Why?
The chart below showcases how global infrastructure generally tracks or exceeds inflation dictated by CPI, supporting the case that infrastructure can offer inflation protection.
Other key features of global infrastructure are the high barriers to entry and the physical assets, which are difficult to replace and often essential for society to function (such as utilities). Infrastructure assets tend to benefit from predictable rising cash flows due to inelastic demand and monopolistic traits. This enables them to have a steady stream of cash flows over the long run and leads to strong dividend growth across multiple market cycles and macroeconomic scenarios.
In short, investors concerned with both long-term inflationary trends and near-term pricing surprises may find it worthwhile to investment in infrastructure and real assets!
One might think that higher interest rates and inflation affect the financial performance of all businesses in the same way. In reality, this couldn’t be further from the truth. As shown, interest rates and price pressures have less influence on infrastructure investments than most investors think.
By investing in the NBI Global Real Assets Income Strategy, you can benefit from:
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