Quantum Wealth Summary
- One area facing almost certain growth in developed economies is infrastructure.
- Infratil [NZX:IFT] has delivered an average post-tax return of 18.6% a year over 29 years.
- Can these returns continue? And where could the next Infratil likely emerge?
- We look at 2 companies changing infrastructure investment and the upside they could offer.
- And we cover our Top 5 Global Quantum Wealth Trends.
It’s no secret. When it comes to building wealth and true passive income, I like shares — equities.
According to Benjamin Graham, Warren Buffett’s mentor and teacher, stocks outperformed inflation 78% of the time. From when records began in the 1920s through to his last update of The Intelligent Investor in 2002.
I’d posit these days that equities still offer one of the greatest chances of keeping ahead of inflation.
In fact, while property values plunge 15% and passive funds follow similar drawdowns, our active equities strategy for Wholesale Investors is currently tracking to end this year positive.
When you look at building wealth in equities, it comes down to a few key things.
You’re buying businesses. Ideally, those businesses grow and deliver a strong return on the capital invested. They distribute income to shareholders. And sometimes buy back their own shares when those shares are priced below intrinsic value.
For businesses to grow and sustain strong returns, they need to exist in industries with perennial and ideally growing demand.
Thus, you need to select strong industries in growing economies, where you can trust the reporting of companies.
One area facing almost certain growth in developed economies is infrastructure
Much of the existing infrastructure in North America and Europe is due for upgrade. And across the Asia-Pacific and Australasia, new infrastructure is needed to support population growth.
Then the needs of infrastructure itself are changing fast. As the world attempts to decarbonise, there’s growing demand for clean energy, new transportation options, and new ways of enabling economic growth.
The largest holding in my current portfolio is an infrastructure company. A holding that has been built up over many years in Infratil [NZX:IFT].
Why do I like this Company?
In the early 2000s, I recall they had a stated aim of providing investors a 20% annual return. They were also high-conviction investors — as I am — and focused on growing infrastructure assets.
Their portfolio has become somewhat riskier over the years. But they’ve also delivered quite close to their high aim all those years ago.
Since listing in 1994, Infratil has delivered an average post-tax return of 18.6% a year over 29 years.
Today, Infratil trades at a much higher premium than before. I hold for the dividends and to see if they can maintain such a long stretch of growth.
But I’m actively looking for infrastructure stocks that sit at value and are ready to grow. And produce strong income. And these days, my remit is developed markets around the world.
Let me share with you what I’ve found…