The safest companies for investors
As the economy pushes Iraq off the front pages, jobs have replaced bombs as Americans’ biggest worry. Little wonder then that at Hustings across the United States, Hillary Clinton and Barack Obama are waxing lyrical about what they’re going to do to create them.
Clinton talks about five million jobs in the next ten years, Obama is a bit more vague. But when it comes to talking about exactly how they’ll get these millions back to the workforce, they’re both specific. They are going to invest in infrastructure.
And they aren’t alone. Across the emerging world, infrastructure investment is booming as governments try and create the transport, water and communication networks that their growing economies need. Lehman Brothers estimates there are around 2,000 different projects, including roads, railways and ports, currently underway in the Middle East alone.
That’s one of the things that might just make the companies that build roads and repair water mains one of the safest places for investors to be right now. How to get in? Established funds include the Invesco Asia Infrastructure fund, the Credit Suisse Equity (Lux) Infrastructure and the CF Macquarie Global Infrastructure Securities – but as offshore funds, they are slightly harder to invest in.
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Better might be one of the newer funds, the First State Global Listed Infrastructure Fund, which invests in 40 infrastructure-themed firms with over 40% of the fund invested in the Europe (ex-UK) region.
Otherwise, there are investment trusts, such as HSBC Infrastructure (HICL) or Utilico Emerging Markets (UEM), up 13.7% and 18.7% respectively in the last year. The latter is interesting, but possibly more risky than other funds: not only does it invest in less developed markets, but its portfolio is very concentrated, with 50% in the top ten holdings.
Overall, the best way in is probably via exchange traded funds, such as BGI iShares S&P Global Water (IH20), which is exposed to companies such as Veolia Environment and other firms leveraging their businesses off the global shortage of fresh water and the leaky pipes across Europe and the US, or the iShares S&P Global Infrastructure ETF (IGF), which pretty much covers everything. It is made up of 40% utilities, 22% highways and railroads, 20% oil and gas storage and transportation, and 8% marine ports, with US companies making up 23.7% of the mix.
