Beyond Stocks and Bonds

Listed infrastructure is the term used to describe publicly traded companies that generate the majority of their cashflows from owning and/or operating infrastructure assets. An example of such a company would be NextEra Energy who is one of the largest providers of power and electricity in North America. The company owns and operates a variety of power assets such as natural gas power plants, wind farms and solar farms to provide energy to homes, businesses and communities across the U.S. and Canada.

Listed infrastructure is still a relatively new asset class. However, due to the rise in privatization of the industry, there has been a swift increase in both the number and size of publicly traded infrastructure companies worldwide. Nowadays, publicly listed infrastructure companies can be found throughout the economy, providing investors with a wealth of opportunities to invest in the growing sector. 

Over the last two decades, investor enthusiasm for listed infrastructure has grown. This is due to the compelling characteristics of the asset class and the strategic benefits it provides to a traditional portfolio over a full market cycle. These benefits include:

• Stable and predictable cashflows - One of the key attributes of listed infrastructure is that their cashflows are typically supported by contractual arrangements, providing consistency and predictability across differing economic environments. The ability to generate these stable and predictable long-term cashflows translates to steady and attractive dividend yields.
• Diversification - Infrastructure is a unique asset class and over the long term exhibits a relatively low correlation with the broader equity and fixed income markets. Having the increased diversification that listed infrastructure offers, across both geographies and sectors, can be a very powerful diversification tool for an investor’s portfolio.
• Enhanced portfolio returns - Global listed infrastructure assets tend to complement other common investment portfolio holdings. The relatively low correlation with other asset classes along with the attractive return profile driven by stable dividends means the inclusion of the asset class in a typical 60/40 portfolio can enhance risk adjusted returns and help drive the portfolio closer to the optimal asset mix.
• Access to growing industries - Infrastructure is not just a defensive asset class. As governments remain reluctant to participate in infrastructure, the reliance on private capital will increase. This suggests a very healthy supply of attractive projects for listed companies in various growing regions and sectors. This would allow investors to participate in growing markets and continue to drive demand for global listed infrastructure as an asset class.

Gaining access through the TD Active Global Infrastructure Equity ETF 

Not all infrastructure is created equal, and with several different investment options available, choosing the right infrastructure investment can be challenging.  To strive for the best risk return profile that will be accretive to a client’s portfolio, it is critical that thorough due diligence and portfolio management be completed by a team that has extensive experience in this space. This is where the TD Active Global Infrastructure Equity ETF (TINF) may be a great tool for investors.

TINF is an actively managed, globally diversified infrastructure ETF solution that leverages TD Asset Managements' (TDAM) infrastructure investment expertise and focuses on providing total return with lower volatility. The strategy’s dedicated portfolio managers employ a rigorous three-step investment process that utilizes quantitative screens, qualitative analysis and most uniquely, team-based decision making to select between 40-60 of the highest quality names across both traditional and new generation infrastructure. This flexibility helps the PMs to deliver on their core objective of providing a regular source of income through investments in core infrastructure while also enabling them to participate in the future of where infrastructure investments are heading.

TINF may be an excellent way to tap into the space by providing exposure to the highest quality globally diversified infrastructure securities that generate stable and growing cashflows with the added liquidity of an ETF wrapper.

For more information about TINF and to view our entire ETF line-up, visit us at td.com/etfs.