Infrastructure investment has changed vastly in the last few years. Not only is the sector at the epicenter of Biden’s stimulus packages, but “infrastructure” has evolved beyond the traditional view of buildings and transportation. Infrastructure investment now refers not only to road and rail—the literal backbone of 20th century development—but also to emerging global themes like decarbonization, clean water, and digital transformation. Further, infrastructure investment has expanded from municipal bonds to equities and other fixed income solutions. As in the past, there continue to be compelling reasons why an allocation in infrastructure makes sense for today’s portfolios:
• Consistent and stable return profile
• Strong portfolio diversifier.
• Focus on essential assets.

Why Now?

President Biden has put America’s aging infrastructure at the center of his presidency and there is a major infrastructure bill moving through Congress which we believe would provide unprecedented opportunity for investment in the sector.
But what is the best way to invest in infrastructure?

Essentially there are three routes. First, through globally listed infrastructure, which is currently trading very favorably levels^*. For example, P/E ratios for infrastructure equity investments are well below those of other comparable investment profiles. Take a look at the MainStay CBRE Global Infrastructure Fund (VCRIX), a Lipper Award winning fund, to learn more.

Second, tax exempt muni bonds can be a strong and traditional option. Three-quarters of all infrastructure funding is provided by muni bonds, and the sector has generally had fewer credit downgrades than the bond market as a whole, largely because of the “essentiality” of the services that municipal issuers provide. For example, the provision of water, power, and education have not been greatly affected by recessions. An option for infrastructure investment via tax exempt muni bonds consider the IQ MacKay Municipal Intermediate ETF (MMIT), a highly rated fund by Morningstar.

Third, taxable muni bonds are an increasingly popular option which fulfil an important role in the ecosystem. Their issuance has surged since their effective inception in 2008 via Build American Bonds after the global financial crisis. They consist of largely the same issuers, but their taxable status means they can be utilized in areas where conventional muni bonds largely have not, such as qualified plans, pensions, endowments, and foundations. Check out the MainStay MacKay U.S. Infrastructure Bond Fund (MGOIX).

*Source: CBRE Clarion as of 3/31/21
All investments are subject to market risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market.

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Please ask your clients to consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus and, if available, the summary prospectus, contain this and other information about the fund and can be obtained by contacting you, the financial professional. Instruct your clients to read the prospectus or summary prospectus carefully before investing.

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N.B. This is sponsored content, not FINSUM editorial.

(New York)

There has been a lot of worry about bond prices recently. With inflation rising steeply and the bond market still regaining its footing, it is easy to worry about another sharp selloff. Because junk bonds are on the riskier end of the fixed income spectrum, many think there is more risk in this area. However, the opposite is true, especially in a rising economy. Because they tend to have higher yields and shorter terms, junk bonds naturally have less rate risk. Additionally, because of their underlying financials, junk bonds have a lot to gain in a rising economy. For example, they may be likely to get upgraded, and because of their relatively weak financial positioning to begin with, even minor gains can mean substantial valuation improvements.

FINSUM: If you need income, then high yield bonds are one of the best bets given their natural rate hedging and their potential for significant financial improvement.

(Houston)

The commodities boom has been going on since at least late last year, but the big question is where the booms in many underlying raw materials can last. At least as it concerns major commodities like oil, minerals, and lumber, the answer is a big yes. The reason why is that the current boom has to do with underinvestment in production over the last 18 months, a problem that is hard to solve quickly. This means demand will outstrip supply for the foreseeable future in many areas. Lumber is a good example, where underinvestment has led to soaring prices.

FINSUM: Capital has not been adequately invested to meet the demand of consumers and prices are showing it. Equilibrium will take some find to find. There is a nice runway for commodities.

(New York)

With the huge CPI number hitting the tape yesterday, gold had a predictable reaction: it rose. Since bottoming out a few months ago in the $1,600 range, it has since risen to over $1,900 as inflation fears have picked up. However, inflation is not the only thing driving the metal, as the Fed is playing a big role too. If the Fed stays dovish, and therefore the path of rates looks to stay low, then gold is in a great position—higher inflation with little rate risk from the Fed.

FINSUM: Gold is in a good spot. The Fed will only start hiking if inflation really jumps, which would push gold higher anyway. If inflation is more mild, then at least their won’t be rate pressure.

By Duncan MacDonald-Korth, CEO, AdvisorTarget

In this series, Duncan MacDonald-Korth, CEO of AdvisorTarget, shares insights on how intent data and predictive analytics can anticipate financial advisor data intelligence.

Data packs, or asset data, may be considered the only insight asset managers have into what advisors buy; but they are also a systemic issue in our industry that create a unique set of problems. The following are only a subset of why accessing data like this isn't enough to drive your company's revenue.

1. Asset Manager Reputation is Negatively Impacted

Data packs have a negative impact on advisors—ask any advisor and they will complain about how data packs annoy them.

Take this typical scenario from a top producer at a wirehouse in New York City: “Like clockwork, a few weeks after I make a trade, say for an investment grade bond fund, I get calls from 30+ wholesalers in the same week trying to sell me the same product. I can’t tell you how annoying that is.”

This hurts asset managers’ reputations with advisors. Instead of buying the product, advisors shun all calls from wholesalers.

2. Retrospective Data is Limited

Asset data is, by definition, retrospective. It can tell you what has happened but gives little insight into what will happen next.

This has the effect of creating dead-end feedback loops in which wholesalers pitch advisors on the products they have already bought.

3. Intent Data is Key

While asset-level data is highly valuable, true utility exists in knowing what advisors intend to do next. This is where intent data on advisors comes into play.

Instead of guessing what an advisor might buy, or pitching them products they recently purchased, asset managers can use intent data to get into the mind of advisors and sell them products in which they are showing active interest.

For example, imagine you are a travel agent. Would you want to try to sell vacations to people who have already purchased their vacation packages, or would you rather know which destinations clients are currently researching? It’s about what’s next.

Simply put, asset data is not enough to drive product distribution. To accelerate distribution and increase AUM, asset managers need to embrace data and technology to build effective distribution tools. Data-driven relationship marketing strengthens your advisor relationships because you are using predictive analytics to execute on the best next action through all stages in the sales cycle.

Empower your wholesalers with access to predictive financial advisor data intelligence. AdvisorTarget & Discovery Data: Predictive behavioral insight on the now. Actionable intent for the next.