The Investment Characteristics of OECD Infrastructure: A Cash-Flow Analysis

9 Pages Posted: 12 Jun 2014

See all articles by Serkan Bahçeci

Serkan Bahçeci

J.P. Morgan Asset Management

Mark Weisdorf

J.P. Morgan Asset Management

Date Written: May 23, 2014

Abstract

Sufficient reliable data on private market total returns do not exist for infrastructure investments, which makes it difficult to assess the performance of infrastructure through macroeconomic cycles. In this article, using 27 years of historical EBITDA data (1986–2012) for 229 mature infrastructure assets across six sub-sectors in the United States and Western Europe, the authors explore cash-flow growth rates generated by infrastructure, real estate, and corporations to provide important insights into the investment performance of infrastructure. The results demonstrate that the volatility of infrastructure cash flows is materially lower than, and not highly correlated with, those of real estate and equities. Further, infrastructure cash flows outpaced CPI inflation and GDP growth during the past three recessions. Finally, diversification opportunities exist across infrastructure sub-sectors and geographies.

Keywords: Cash-Flow Analysis, Diversification, EBITDA, Infrastructure, Pension Fund, Volatility

Suggested Citation

Bahçeci, Serkan and Weisdorf, Mark, The Investment Characteristics of OECD Infrastructure: A Cash-Flow Analysis (May 23, 2014). Rotman International Journal of Pension Management, Vol. 7, No. 1, 2014. Available at SSRN: https://ssrn.com/abstract=2449755

Serkan Bahçeci (Contact Author)

J.P. Morgan Asset Management ( email )

245 Park Avenue
New York, NY 10167
United States

Mark Weisdorf

J.P. Morgan Asset Management ( email )

522 Fifth Avenue
New York, NY 10036
United States

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