Chloe Berry, Head of Brookfield Infrastructure Income at Brookfield Oaktree Wealth Solutions, joined Keith Black, Managing Director of RIA Channel, to discuss the role of infrastructure investments in client portfolios.
Brookfield Oaktree is one of the largest global asset managers with over $850 billion invested, with over half of the firm’s assets allocated to real estate and infrastructure. Brookfield has been investing in infrastructure for 120 years, starting with ownership of dams and hydroelectric facilities, which supplied electricity to the majority of the Brazilian population.
There is a tremendous need for infrastructure investment globally, including transportation, utilities, midstream energy, and data infrastructure. In developed markets, the infrastructure that was built decades ago needs to be upgraded, while new infrastructure is being built to serve the growing income and population of developing markets. While fiscal policy incentives are positive for infrastructure investors, private capital is needed to meet the infrastructure needs that have not been covered in government budgets.
Berry notes that the key benefits of infrastructure investing include stable income, inflation hedging, a low correlation to other asset classes, and low volatility of returns in private infrastructure funds. A responsible infrastructure manager will operate with long-term contracted cash flows that grow with inflation. Infrastructure assets can be funded with long-term, fixed-rate debt. Combined with cash flows that grow with inflation, infrastructure assets can provide predictable and stable streams of cash flow.
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