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Monthly Investment Outlook

Wells Fargo Investment Institute - February 2022

Presenter: James W. Sweetman, Senior Investment Strategist, Wells Fargo Investment Institute


Transcript: Monthly Investment Outlook: Infrastructure: From a shot in the arm to a new era

Presenter: James W. Sweetman, Senior Investment Strategist, Wells Fargo Investment Institute

On screen: 

Investment and Insurance Products: NOT FDIC Insured, NO Bank Guarantee, MAY Lose Value

We believe the near- and long-term outlook for infrastructure investing is positive. In November 2021, the U.S. Congress passed the $1.2 trillion Infrastructure Investment and Jobs Act that should benefit multiple sectors and industries, creating opportunities for investing across the investment landscape including individual stocks, municipal bonds, and private capital.

The new reality is that infrastructure investing can be both traditional and cutting-edge, stable and volatile. We believe there will always be a need to create, repair, and replace critical societal and transportation assets. However, technological innovation — not to mention an accelerating focus on de-carbonization; environment, social, and governance trends; and renewable energy — are shaping and driving an expanded opportunity set, broadening the spectrum of infrastructure investing. Perhaps no other asset sits so squarely at the intersection of past, present, and future.

One of the most straightforward ways investors can get exposure to the asset class is through infrastructure mutual funds and exchange-traded funds. These vehicles offer investors fast access and liquidity, since their portfolios are invested in exchange-listed securities of infrastructure-related companies — in other words, the publicly traded portion of these companies’ debt and equity. We also believe that private infrastructure investments are a great complementary strategy for qualified investors. Private infrastructure investments are less liquid, but create value by investing across the risk spectrum including core, value-add, and opportunistic investments and have the potential to generate more attractive and stable returns.

In conclusion, we believe the near- and long-term outlook for infrastructure investing is positive — particularly for the Communication Services, Industrials, Materials, and Utilities sectors. The $1.2 trillion Infrastructure Investment and Jobs Act should benefit multiple industries — which we cover in detail in our Special Report, “Infrastructure: From a shot in the arm to a new era”— creating opportunities for investing via individual stocks, municipal bonds, and private capital. However, the opportunity set within infrastructure goes beyond that — potentially creating expanded investment opportunities in the future.