- November 2009 Vol. 2 No. 6

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Nickels and Dimes: Cash Flows Give Infrastructure Investors Some Comfort During Recession

by Drew Campbell

Infrastructure assets are coveted because of their steady cash flows derived from fees and tolls paid by motorists, energy consumers, air and rail travelers and more. The asset category is diverse and the different asset types produce uneven performance. Savvy investors can use this to their advantage, but if not managed correctly, the bumpy performance can be risky. The current recession has been unique among recent recessions because of an intense freeze on credit — something essential to financing infrastructure investment — and it has tested infrastructure investors’ skills.

One of infrastructure investment’s central appeals is its ability to buck recessions. People will pay for essential goods and services such as water and power whether an economy is booming or busting because food has to be cooked, homes need to be heated and toilets must be flushed, and those payments get passed on to investors. Economists call this “inelastic demand” — the pric

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