Unconventional Wisdom: A Talking Blog by Steve Saenz

Infrastructure: Mega-Trend of the 21st Century

3/2/2013

Coming to a planet near you: $57 trillion in infrastructure investments...

INFRASTRUCTURE (think bulldozers, pipelines, power grids, etc.) has always been an important investment theme but in the past ten years it has taken on a life of it's own.

In the late 00's investment firms, management consultancies and academic institutions began talking about infrastructure as a new "asset class," like equities, fixed income and precious metals. As we did with emerging markets, managed futures and alternative investments many touted the virtues of this relatively new asset class. Wall Street loves new asset classes!

Papers were written about the diversification benefits of infrastructure investments as they relate to portfolio management. Management consultancies such as Ernst & Young, McKinsey, KPMG and PwC established infrastructure practices. At the academic level, analysts debated whether infrastructure was, in fact, a true asset class. The consensus, by the way, was that infrastructure is indeed an asset class.

Lest you think infrastructure is "old news," just two weeks ago, the US Chamber of Commerce held it's First Annual Transportation Infrastructure Summit, Let's Rebuild America. Last week, McKinsey released an excellent piece called, Rethinking Infrastructure, which was the inspiration for this slog post.

2013 Report Card is now available online...

Don't miss the state-level report cards from the ASCE. The hyperlink in this image will lead you to those.

My purpose in sharing this information, however, is not to promote (or downplay) the notion of investing in infrastructure but rather to create awareness about a mega-trend that has important implications not only for investors but for the many children and young adults who are wondering what they should be when they grow up.

Suffice to say that the career prospects for civil engineers and other professions associated with global infrastructure planning, building, etc. will be pretty bright for the foreseeable future. In short, if you know any kids who like bulldozers, they're in luck!

Regardless of how you slice it, a lot of bridges and roads need to be fixed and/or built around the world in the next several decades! These state report cards on the condition of our infrastructure prepared by the American Society of Civil Engineers bring it down to a local level that everyone can understand. In terms of it's impact and longevity, infrastructure has the potential to be as significant as the demographic (baby boom) mega-trend. That's a powerful locomotive that many have been riding since the early-1980's and one that is still going strong.

Global Infrastructure: Evolving Asset Class Stanford University (full slide show below)

In Rethinking Infrastructure, McKinsey's Infrastructure Practice points out that the world will have to spend $57 trillion on infrastructure by the year 2030 just to keep up with projected global growth. The video below provides an executive summary but the entire video is a must-watch. I have also included some PDFs and links to related content at the bottom of this page.

In summary, the global infrastructure story has significant and long-term implications for corporate executives, investors, financial professionals, parents, educators, government leaders, futurists and more. I say, CARPE FUTURO! There is no time like the present to seize the future -- especially if you are in college or early in your career...