New Definitions of Essential Infrastructure May Present Opportunity for Investors

March 11, 2021

If you’ve read our blogs before, you likely know where Reaves places its investment focus: essential service infrastructure companies that lie at the very foundation of our modern economy.

We focus on these types of vital, well-moated businesses because we believe they provide our clients the best pathway for steady, compounding growth, with low risk of permanent capital impairment.

But make no mistake, steady, compounding growth doesn’t mean boring. As society evolves, so must the infrastructure that underpins it. Currently, changes in what society deems “essential” means our investment strategies are hitched to some of the most important growth themes that will define the next decade.

As we explained in a Q&A session addressing some of the questions potential clients ask most, we see several enduring growth themes within the infrastructure space that are represented in our strategies. A few of them include:

  • Within communication assets, the continued demand and reliance on high speed, dependable internet to work from home, go to school from home and generally live more of your life at home, continues to highlight the essential nature of the broadband networks built by cable companies.
  • The adoption of cloud computing solutions has and continues to support the growth in data consumption and storage for individuals and enterprises alike. Well positioned data center operators are a prime beneficiary of this demand trend.
  • In wireless towers, consumer demand for more reliable wireless networks furthers the importance of these well-moated businesses. The advent of 5G presents even more growth potential for these unique and difficult to replicate assets.
  • In transportation, innovations in railroading management is paving the way for more efficient and productive systems. The implementation of precision railroading strategies has already led to improved monetization of these valuable network assets and the companies who manage them.
  • Within the utilities sector, a renewable energy transition stemming from the global energy transition away from fossil fuels will enable certain utilities to have fundamentally higher growth potential.

To learn a little more about how we see the world, and how our essential service infrastructure strategies fit within a broader portfolio, read our full FAQ.

Investors: You Asked, We Answered.


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