Obama plan reinforces SWIP’s conviction in infrastructure investments

Scottish Widows Investment Partnership's (SWIP's) recent analysis of the US market and president-elect Barack Obama's economic stimulus plan has reinforced its conviction in US infrastructure.

SWIP has been researching the sector over a number of months and believes that Obama's proposed economic stimulus package will kick start much needed investment in infrastructure. SWIP is looking at companies that will benefit from developments in US infrastructure over the long-term.

Nick Ford, Fund Manager, US Equities comments: "We welcome Obama's plan for investment in US infrastructure. However, the state of the economy will slow infrastructure spend in the near term, regardless of the fiscal stimulus Congress may supply. Although, the investment tap will not be turned off because the US needs to invest in capital equipment in order to ensure the economy recovers over the long-term.

"This in turn will provide opportunities for US companies providing materials and services for power, highways, bridges and water supply, all of which will need upgrading over the coming years."

According to SWIP's analysis, regardless of politics, US infrastructure is starting to creak. There is a lot of ageing equipment that was built in the 1940s and 1950s which requires much needed investment. This is a theme SWIP has been looking at for some time now and SWIP's portfolios are set up to benefit from the current economic scenario, whether or not Obama's plans are successful.

Simon Moss, Fund Manager, US Equities adds: "We are looking at companies such as Quanta Services which manufactures products for the transmission of electricity. The US equivalent of the national grid is looking to outsource a lot of its work when upgrading the system. Companies such as Quanta will benefit from long-term investment in one of the world's largest electricity supply lines."

On the flip side of this SWIP is much more cautious on consumer stocks as its analysis concludes that capital spending will provide the largest stimulus for the US economy not consumer spending.