Infrastructure Equities as a Core Investment

Balancing Stability, Growth, and Income in Changing Economic Environments

The infrastructure asset class includes sectors that are sensitive to both GDP (like Energy and Industries) and interest rates (such as Real Estate and Utilities). These sectors perform differently based on economic growth and interest rate trends, which is why infrastructure should be thought of as a core component of a well-rounded portfolio, rather than a niche investment. Its performance more closely mirrors that of a diversified, balanced fund.

Further, investing in infrastructure equities during a declining rate environment with slowing economic growth may improve the risk adjusted returns of a diversified portfolio for several reasons.

Here are the top factors to consider:

Stable Revenue and Cash Flow Streams

Infrastructure assets, such as those in the utilities, transportation, and energy sectors, typically provide essential services, which means demand remains relatively stable throughout the business cycle. These assets often have long-term contracts or regulated revenue structures, ensuring steady cash flows and stability.

Attractive Dividend Yields

Infrastructure companies may often offer higher-than-average dividend yields. In a declining interest rate environment, income-seeking investors may be drawn to equities that provide consistent and attractive dividends, making infrastructure stocks more appealing. As bond yields fall, infrastructure equities become more competitive as a source of investment income.

Capital Appreciation as Rates Decline

As interest rates fall, the cost of capital decreases for infrastructure companies, which often require significant financing for large-scale projects. Lower financing costs can improve profitability and expand the capacity for growth projects, potentially driving capital appreciation. Additionally, declining rates often boost asset valuations, benefiting infrastructure stock valuations.

Long-Term Growth Potential

Infrastructure projects are typically long-term in nature and capital-intensive, with demand for them continuing to rise due to population growth, urbanization, and the need for modernization in both developed and developing economies. Government initiatives, particularly in renewable energy and digital infrastructure, often support these projects, creating potential for growth even when the broader economy slows.

Low Correlation to Broader Market Volatility

Infrastructure equities tend to have a low correlation to broader equity market volatility. Their performance is more linked to operational metrics and contract structures rather than short-term market sentiment, making them relatively defensive investments in uncertain or declining market conditions.

Inflation Protection

Many infrastructure assets, particularly in sectors like utilities and transportation, have pricing mechanisms linked to inflation. Even in slow-growth environments, these assets can adjust prices upward, providing a natural hedge against inflation, which is beneficial in a fluctuating economic climate.

Government Stimulus and Support

In periods of slow economic growth, governments frequently introduce fiscal stimulus packages that focus on infrastructure development to boost employment and economic activity. Infrastructure companies stand to benefit from increased spending on public works, transportation systems, renewable energy, and other critical projects, supporting growth.

Resilient to Economic Downturns

Unlike other sectors that may be more cyclical, infrastructure is generally less sensitive to economic cycles. The essential nature of infrastructure services—like electricity, water, and transport—ensures that these companies maintain demand and revenue even when broader consumer spending declines.

By focusing on these factors, infrastructure equities can offer a combination of defensive qualities and growth potential irrespective of the economic environment.

NPP356

(Series F)

Ninepoint Global Infrastructure Fund

Mutual Funds Sector Equity

$14.32 $0.12 (0.87%)

As at 9/27/2024

Growth of $10,000 Invested as at 8/30/2024

Performance as at 8/30/2024

1 Year
18.70%

3 Year
7.88%

5 Year
8.07%

10 Year
6.28%

Incept.¹
7.96%

¹ Inception Date 9/1/2011

Go To Fund

All returns and fund details are a) based on Series F shares; b) net of fees; c) annualized if period is greater than one year; d) as at 8/30/2024. Top ten holdings, sector allocation and geographic allocation as at 8/30/2024. Top ten holdings based on % of net asset value. Sector allocation based on % of net asset value. Geographic allocation based on % of net asset value and excludes cash. Numbers may not add up due to rounding. Cash and cash equivalents include non-portfolio assets and/or liabilities.

The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the investment fund or returns on investment in the investment fund.

*The monthly distribution amount may be adjusted by the Manager without notice throughout the year as market conditions change. Monthly distributions will be comprised of net income, net realized capital gains and/or return of capital. Any net income and/or net realized capital gains earned by the Fund in excess of the monthly distribution will be distributed to unitholders annually in December.

The Fund is generally exposed to the following risks: Capital depletion risk; Concentration risk; Credit risk; Currency risk; Cybersecurity risk; Derivatives risk; Exchange traded funds risk; Foreign investment risk; Income trust risk; Inflation risk; Interest rate risk; Liquidity risk; Market risk; Regulatory risk; Securities lending, repurchase and reverse purchase transactions risk; Series risk; Short selling risk; Small company risk; Specific issuer risk; Tax risk.

Ninepoint Partners LP is the investment manager to a number of funds (collectively, the “Funds”). Commissions, trailing commissions, management fees, performance fees (if any), and other expenses all may be associated with investing in the Funds. Please read the prospectus carefully before investing. The indicated rates of return for series F units of the Funds for the period ended 8/30/2024 are based on the historical annual compounded total returns including changes in unit value and reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.

The information contained herein does not constitute an offer or solicitation by anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should contact their financial advisor to determine whether securities of the Fund may be lawfully sold in their jurisdiction.

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The information contained herein does not constitute an offer or solicitation by anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should contact their ﬁnancial advisor to determine whether securities of the Funds may be lawfully sold in their jurisdiction.