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Testing infrastructure’s resilience amid heightened uncertainties

by Nick Langley, Managing Director and Portfolio Manager at ClearBridge Investments.

Key Takeaways

  • We tested the short- and long-term return profiles of infrastructure against a backdrop of changing macroeconomic factors, examining infrastructure’s strength in different inflation, GDP growth and bond yield scenarios.
  • In short-term scenarios like a severe credit event, quantitative tightening and stagflation, and in long-term scenarios like financial repression, deglobalisation and climate inflation, the effect of the changes in macro variables on infrastructure returns is positive in most cases.
  • Active rebalancing of subsector exposure to optimise portfolio outcomes given the conditions of each scenario results in a reasonable improvement in investor outcomes, suggesting active management of listed infrastructure provides the greatest flexibility to navigate varying macroeconomic scenarios.

Download the full paper here

 

  •   25 May 2023
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