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Stress test: Is infrastructure a defensive asset class? We may soon find out.
- February 1, 2019: Vol. 12, Number 2

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Stress test: Is infrastructure a defensive asset class? We may soon find out.

by Drew Campbell

Since September 2018, equity markets have been signaling potential trouble ahead, but is that a sign of a sputtering economy or a shift in interest rate policy after a decade of low rates? The economy seems to be in stable shape with jobs numbers and growth remaining healthy, but interest rates continue to rise, and so it seems the latter is having more of an effect on markets.

Public equity prices also usually lead valuations in private markets by months. If the volatility in the listed markets is in fact a preview of more to come, infrastructure investors are poised to learn the answer to the question — is infrastructure a defensive asset class?

But that answer would have some shades of gray because infrastructure assets’ relationship to the economy can vary by the asset type. Toll roads, ports and airports, for example, will feel the effects of a slumping economy more so than regulated utilities and other assets with contracted revenue streams. The types of asse

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