If interest rates rise and inflation manifests, infrastructure stocks will be more insulated than other equities.
Example with auto play
That’s because “infrastructure companies are often monopolies and they’re heavily regulated,” says Nick Langley, investment director and senior portfolio manager of RARE Infrastructure in Sydney, Australia.
“Most of the regulators across the world take inflation and interest rates into account when [they] set tariffs for infrastructure companies,” he says. For instance, in Europe, Asia and Australia, utilities tariffs are set on four- to-five year bases, so governments can take into account current economic environments.