Opportunities in Global Infrastructure

June 18, 2010

Susanta Mazumdar, portfolio manager of the T. Rowe Price Global Infrastructure Fund, shares his thoughts about the potential benefits of investing in a combination of growth-oriented infrastructure firms and higher-yielding utilities companies, as compared with broader global equity markets.

Emerging markets such as China, India, and Brazil are investing hundreds of billions of dollars in infrastructure projects to help support and sustain their fast-growing economies. At the same time, developed markets in North America and Europe are in dire need of an infrastructure overhaul after decades of underfunding and neglect. As a result, an increasing number of private sector companies are poised to capitalize on massive government infrastructure spending, providing investors with attractive opportunities for long-term growth and income.

The new T. Rowe Price Global Infrastructure Fund seeks to benefit from this rapidly growing asset class by investing in a combination of growth-oriented infrastructure firms and higher-yielding utilities companies. Infrastructure firms involved in engineering and construction, road and rail, sea and airports, telecommunication, and alternative energy offer the potential for relatively strong performance compared with broader global equity markets. At the same time, the higher yield component and more predictable cash flows from utilities stocks are intended to provide some downside protection during rough times. Fund management expects to invest approximately one-third of assets in faster-growing emerging markets, with the remainder divided between mature markets in North America and Europe.

Source: Data provided by MSCI and UBS.
Investors cannot invest directly in an index. Past performance cannot guarantee future results.
Benchmark Definitions

While a global infrastructure portfolio offers the potential for substantial reward, there are also risks. Investors should remember that this is a concentrated portfolio and is subject to risks from the larger global economy, currency fluctuation, political and regulatory concerns, and other challenges. But for investors looking to diversify their international portfolios, the Global Infrastructure Fund offers a compelling opportunity for long-term growth, current income, and relatively low volatility.

For a closer look at the potential benefits of the T. Rowe Price Global Infrastructure Fund, see "Investing in Global Infrastructure for Growth and Income" in the T. Rowe Price Report (Spring 2010).