Infrastructure and the Global Financial Crisis: Ten Years On
Summary
A decade on from the 2007-08 financial crisis, this paper examines how infrastructure fared during the crisis and its aftermath, and how a subsequent financial downturn might affect infrastructure investments.
The resilience of infrastructure
A decade after the demise of Lehman Brothers and Washington Mutual heralded the 2007-08 financial crisis, this paper examines how infrastructure, as an asset class, fared during the crisis and its aftermath, and how a subsequent financial downturn
could affect infrastructure investments.
After several years of relatively strong economic growth, concerns are once again rising that the global economy may be headed for a downturn. Financial market volatility, the length of the upswing in the economic cycle in many advanced economies,
and the removal of unprecedented expansionary monetary policy are just a few of the catalysts being considered by market analysts for a potential economic downturn.
The effects of the GFC are still shaping economic performance and policy, and have left a lasting impact on markets and investors.
Michael Landman, Executive Director
The Global Financial Crisis (GFC) led to a range of adverse economic and financial issues that impacted all asset classes. Although unlisted infrastructure can exhibit an inherent robustness for many reasons (which was well demonstrated during
the financial crisis), this asset class was not immune from being buffeted by the external investment environment. Although there is some uncertainty as to what the next economic downturn will look like, this paper considers a number of prototype
downturn scenarios that recognise and indicatively quantify how unlisted infrastructure performance may be affected if GDP growth falters.
Comparison of Total Returns: Unlisted Infrastructure Vs Other Asset Class Benchmarks
Source: IFM Investors, Preqin (Note: Preqin Unlisted Infrastructure Index commenced December 2007), Bloomberg.
To 31 December 2018 except Preqin (30 June 2018). Past performance does not guarantee future results.
About the author
Executive Director, Portfolio Management
Michael Landman
Joined in 2007
Michael heads up the Portfolio Management Team, providing fund analysis and thought leadership across IFM Investors’ Australian and Global Infrastructure portfolios. Michael is also responsible for fund transactions and asset management, and is a board member of NT Airports. Prior to joining IFM Investors, Michael worked for BHP Billiton, where he was involved with industrial research and development, oil and gas exploration, field development, engineering and planning, strategy development, and mergers and acquisitions.
About the author
Chief Economist
Alex Joiner, PhD
Joined in 2016
Alex Joiner is Chief Economist at IFM Investors. He is responsible for the firm’s economic, financial market and geopolitical risk analysis that is key in IFM’s investment process. In this capacity he engages with IFM’s domestic and global clients on macro-investment trends and themes. He is a frequent commentator on economic and markets via traditional and social media and regularly speaks at public forums and conferences. He has over two decades of professional experience in economic and markets and prior to joining IFM was the Chief Economist at Bank of America Merrill Lynch (Australian & New Zealand) after being a senior economist at ANZ Bank. He holds a First Class honours degree in Economics and a PhD in Econometrics from Monash University. Alex is also committee member of the Australian Business Economists.
About the author
Associate, Portfolio Management, Infrastructure
Abbie Sui
Joined in 2017
Abbie supports the portfolio work streams relating to the Australian and global infrastructure portfolios. Abbie works closely with other parts of the firm, including the Finance and Operations Team and Global Relationship Group. Abbie previously worked for Halifax Regional Municipality Pension Plan as a Senior Investment Associate, covering all aspects of portfolio management. Abbie has also held previous roles in risk management, finance and fund accounting with Manulife, Royal Bank of Canada and Citigroup in Canada.
Bachelor of Management (Hons) (Dongbei University of Finance and Economics, China), MBA (Sobey School of Business, Saint Mary's University, Halifax).
About the author
Portfolio Analyst, Infrastructure
Emmanuel Heretakis
Joined in 2018
Emmanuel supports the infrastructure portfolio function, which includes portfolio analysis, maintaining portfolio models, valuation processes and performance reporting. Prior to joining IFM Investors, Manny was a Portfolio Construction and Risk Analyst for Hastings Funds Management. In this role, Manny's assessed asset and portfolio risk, managed economic and regulatory databases, and provided assistance to transaction and asset management teams.