RT Journal Article
SR Electronic
T1 Infrastructure as Hedge against Inflation—<em>Fact</em>
               <br/>
               <em>or Fantasy?</em>
JF The Journal of Alternative Investments
FD Institutional Investor Journals
SP 110
OP 123
DO 10.3905/jai.2012.15.1.110
VO 15
IS 1
A1 Maximilian Rödel
A1 Christoph Rothballer
YR 2012
UL https://pm-research.com/content/15/1/110.abstract
AB Infrastructure is regularly considered a natural hedge against inflation due to its monopolistic pricing power, the favorable regulatory regimes, and the limited operating cost exposure. In contrast to this often cited yet not empirically corroborated proposition, the authors find that listed infrastructure hedges inflation just as good (or bad) as other equities. Only portfolios of infrastructure firms with high pricing power exhibit fairly good inflation hedging properties at a five five-year investment horizon, being slightly superior to equities. The analysis provides more robust insights than previous empirical studies, as the authors use a large dataset of 824 infrastructure firms across 46 countries and 37 years, and apply a robust regression methodology correcting for overlapping data as well as spatial correlation.TOPICS: Other real assets, global, portfolio construction, statistical methods