 |
|||
 |
 |
|
||||
|
||||
About Infrastructure Frequently Asked Questions |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
The infrastructure asset class comprises the basic building blocks required for communities to function, providing transportation, communication, energy, utilities and capital goods. A critical component of a society’s vitality, infrastructure directly impacts economic growth, competitiveness, productivity and overall quality of life.
Source: S&P Global Infrastructure Index as of 9/30/07. back to top What investment opportunities are available
in infrastructure securities today? From a broad universe of infrastructure securities, two compelling investment themes emerge. We believe that investors can benefit from access to: • Mature Infrastructure includes investments in companies in traditionally monopolistic industries with mature, long-life assets. These companies' predictable, inflation-linked cash flow make them attractive, offering a lower-risk, moderate return profile that is often typical of hard-asset backed, cash flow-driven investments. • Infrastructure Development focuses on companies that will benefit from the surge in infrastructure spending expected around the globe - particularly in the fastest-growing emerging markets, where demand for new structures and services is most dire. While these investments can carry more volatility and development risk than mature companies, we believe that companies involved in the build out of basic structures provide an important growth-oriented component to a well-diversified infrastructure allocation. back to top How can infrastructure benefit my investment portfolio? As measured by the S&P Global Infrastructure Index, global infrastructure stocks have historically provided:
back to top How does infrastructure diversify my portfolio? Infrastructure securities have historically shown a low correlation to other asset classes.
Correlation is a statistical measure of how two investments move relative to one another. A perfect correlation of +1 indicates that both investments always move together, whereas a correlation of 0 indicates there is no relationship between the two investments. Diversifying your portfolio across non-correlated investment types, including stocks, bonds and alternative investments like infrastructure can help increase returns and lower risk over the long term. Source: Callan Associates, Inc. Correlations based on monthly returns for the five-year period ended 9/30/07. Global Infrastructure – S&P Global Infrastructure Index; World Stocks – MSCI World Index; World Government Bonds – Citigroup World Government Bond Index; Global Real Estate – FTSE EPRA/NAREIT Global Real Estate Index. back to top What is the size and scope of the global infrastructure market? As of September 30, 2007, there were over 73 infrastructure companies in 20 countries valued at approximately $1.3 trillion (per Standard and Poors). back to top What is Odyssey's investment approach? Odyssey endeavors to add value above benchmark returns by stock selection, sector rotation, and our skill at actively managing the portfolio. Using a fundamental, bottom-up investment approach and top-down country analysis, our research team is focused on understanding the cash flow, assets and management of each company in which we invest.
back to top What is the future outlook for infrastructure? In our view, powerful secular trends will propel infrastructure returns and continue to serve as catalysts for infrastructure spending worldwide. These include: • A tremendous need for new development and redevelopment of inferior infrastructure networks • Globalization forces challenging governments to provide the infrastructure necessary to drive productivity and economic growth • Population growth and urbanization trends • Private sector financing of government-operated assets will continue to proliferate as an effective way to close spending gaps and improving efficiency Coupled with demographic shifts driving investors to seek out income-oriented, asset-backed investments, the infrastructure asset class will attract investors for its solid long term growth prospects and meaningful diversification benefits. For all of these reasons, we expect that over time, global infrastructure will become a cornerstone of investment portfolios. back to top What risks must an investor consider? Specific risks to investment in infrastructure include development and operational risks, which could cause cost overruns, and for some companies, regulatory risk and interest rate sensitivity are factors. The political climate may also play a role in how widely public-private partnerships are adopted in the U.S. and other countries, which can affect private participation opportunities. Investing in foreign securities involves risks such as currency fluctuations, political and economic uncertainties and differences in accounting standards. back to top Definitions The S&P Global Infrastructure Index is designed to provide liquid exposure to the leading publicly listed companies in the global infrastructure industry, from both developed markets and emerging markets. The MSCI World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The Citigroup World Government Bond Index is a market weighted index of world government fixed income securities in which the total market value of the constituent countries is at least $20 billion. The FTSE EPRA/NAREIT Global Real Estate Index series is designed to track the performance of listed real estate companies and REITs worldwide. The series acts as a performance measure of the overall market. Index performance is used for comparative purposes
only. An investor cannot invest directly in an index.
|
What
is infrastructure?
16, Quai Général-Guisan, CH-1211 Geneva 3, Switzerland, TeleFax: + 41 44 560-4040