NEW YORK, May 2, 2013 /PRNewswire/ -- J.P. Morgan Asset Management asserts in a new research piece titled "Too Good to Last" that while investors are primarily drawn to infrastructure for its income and lower volatility, early movers are also likely to enjoy outsized capital appreciation over the near to mid-term as the demand for infrastructure assets grows.
In this new report, Mark Weisdorf, portfolio manager, J.P. Morgan Asset Management OECD Infrastructure Equity, predicts that the early mover window will close over the course of the next few years, with discount rates compressing by 100 basis points or more. He explains:
- Core infrastructure currently offers a return that appears more than commensurate with its relatively low risk profile, suggesting the returns may moderate as risk-return perceptions evolve.
- Demand from institutional investors is likely to increase since U.S. pension plans, more recent movers into the asset class, currently have average allocations of less than 1%, while many institutional investors outside the United States are below their larger target infrastructure allocations.
- The increase in supply of mature, "institutional-quality" core infrastructure assets is likely to lag the increase in demand, suggesting a near-term increase in the value of assets, compressing discount rates and future rates of return.
"We believe we are rapidly approaching a tipping point where institutional investors who are searching for income, frustrated by lackluster economic growth and dissatisfied with the volatility of public equity markets, will turn to infrastructure in larger numbers and with greater allocations," said Weisdorf. "This move could result in discount rate compression, pushing asset values steadily higher. We expect this to happen over the next two to three years, to the benefit of incumbent infrastructure investors."
To read more about J.P. Morgan's view on this investment opportunity, please visit jpmorganinstitutional.com.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV