The search for yield

The search for yield

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Historically low interest rates combined with a volatile stock market has sent investors on the hunt for stable returns. Is infrastructure the asset class investors have been looking for? Jack Derwin reports

The last couple of years have been rough for global investors. An official cash rate of 1.5 per cent has dwindled stalwart returns from cash and term deposits. Meanwhile Brexit, the impending US election, and the ongoing Italian banking crisis, among other events, have kept equity markets volatile.

These events have pushed investors to search for alternative sources of yield. At the same time, accessibility to infrastructure assets has markedly improved.

“While typically infrastructure has had very significant barriers to entry, what comes out of these long duration assets are long stable cash flows with much lower volatility compared to other asset classes,” AMP Capital head of SMSF and self-directed wealth Tim Keegan said.

Investor access to these assets has historically been difficult, but this has changed in recent years.

“From an investor perspective they’re getting access to attractive yields, particularly in this market environment, as well as the potential for capital growth,” Mr Keegan said.

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The search for yield
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