ClearBridge believes there is room to run for infrastructure in 2022 as the cost of capital has been in a steady decline over the last decade.
Nick Langley, Portfolio Manager at ClearBridge Investments, shares his outlook for the global infrastructure sector in 2022.
Key Takeaways
- In an uncertain macroeconomic environment, the certainty of future earnings and growth will be key: infrastructure and utilities significantly outperform other equities on this measure.
- Given our base case of slowing growth and higher inflation, our playbook for infrastructure portfolios broadly is to watch for a transition from a growth orientation to a more defensive positioning as growth fades and utility underperformance unwinds.
- Generally, user-pays infrastructure and utility returns are positively correlated to inflation, but results differ by sector and region; meanwhile, climate inflation looms and is underappreciated at present.
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