In addition to providing a hedge against inflation, infrastructure, timber and agriculture have relatively inelastic demand, and they are heavily attuned to emerging market growth, says Michael D. Underhill, the CIO and Founder of Capital Innovations, LLC.
“People are buying fewer cars, they are spending less money on things like appliances, but do you ever hear people saying, ‘I’m eating less,’ or do you ever hear people say, ‘I’m really using the toilet less’?” Underhill said. “So that inelasticity demand for water infrastructure and waste water is there; that can’t go away. And so that ability to pass on price increases through regulated utilities makes infrastructure attractive.”
Underhill says such global growth dynamics as a rapidly increasing population and infrastructure vacuums make these asset classes even more attractive to investors, because demand for infrastructure, timber and agricultural goods will increase alongside global growth.
“Population demographics [drive] consumption patterns for food and water, transportation development, energy needs and growing natural resource depletion, the ubiquitous battle for food, fuel, fire,” Underhill said. “When you look at those population demographics and the supply chain dynamics coupled with constraints in the emerging markets, it is not difficult to see that these stresses are leading to a virtuous circle of investment opportunities.”
Gold Offers Hedge Against Potential Increases in Inflation
May 01, 2012
Jason Fox, CEO of W.P. Carey (NYSE:WPC) Wants You to Know that Publicly Traded Real Estate Is an Inflation Hedge
April 26, 2018
Monsanto Company (MON) Grows in South America, Enters Precision Agriculture Market
April 28, 2014
Urbanization Fuels Infrastructure Buildout in Emerging Markets
October 19, 2011
