Infrastructure: What Problem Could It Solve for Investors?

At Reaves, we’ve carved out a very specific niche in essential service infrastructure in large part because we believe it solves a specific problem for investors. In a call last month with Havener Capital Partners, our president, John Bartlett, explained the defensive role our strategies play within a broader portfolio. A synopsis of his comments follows:

We invest in assets that typically have very low volatility and low variability, and they generally have a higher-than-average capital intensity. They may provide a higher-than-average amount of dividend income. When you put that profile in context, the main problem we solve is the classic investor conundrum of needing not just income, but also growth of income.

We also provide defensiveness within an equity allocation. One of our founders used to call our strategies an anchor to the windward equity portion of someone’s portfolio. I think many people really view us as a bond substitute. They look for us for very dependable equity income.

The recent COVID environment speaks to these companies’ resiliency. If you look across the landscape, all of these companies went through COVID without any dividend cuts to speak of. It's that reliability and stability that we are looking to provide.

To learn more about our essential service infrastructure strategies, and the role they play within a broad portfolio, we invite you to listen to the full call. Please click graphic below to gain access to the call replay.

Disclosures:
Reaves Asset Management is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Registration does not imply any skill or training. Reaves is a privately held, independently owned “S” corporation organized under the laws of the State of Delaware.

The information provided in this blog does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed. Investors should consider the investment objective, risks, charges and expenses of all investments carefully before investing. Any projections, outlooks or estimates contained herein are forward looking statements based upon specific assumptions and should not be construed as indicative of any actual events that have occurred or may occur.

Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. Volatility is often measured as either the standard deviation or variance between returns from that same security or market index.

Variability is the extent to which data points in a statistical distribution or data set diverge—vary—from the average value, as well as the extent to which these data points differ from each other.

Capital intensive refers to business processes or industries that require large amounts of investment to produce a good or service and thus have a high percentage of fixed assets, such as property, plant and equipment (PP&E).

Past results do not guarantee future performance. Further, the investment return and principal value of an investment will fluctuate; thus, investor’s equity, when liquidated, may be worth more or less than the original cost. This document provides only impersonal advice and/or statistical data and is not intended to meet objectives or suitability requirements of any specific individual or account.

All investments involve risk, including loss of principal.All data is presented in U.S. dollars.
Cash is cash and cash equivalents.
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