Issue 31: 2016

Future Perspective

Rebuilding America

Much of the funds needed may come from the private sector.

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When Congress passed the Fixing America’s Surface Transportation (FAST) Act in December 2015, it committed $305 billion to fixing our nation’s ailing infrastructure. Yet, even that may not be enough. The American Society of Civil Engineers estimates a $3.6 trillion gap in the funds needed by 2020, much of which may come from the private sector.

“Infrastructure investment returns could be very significant,” says Chris Hyzy, chief investment officer of U.S. Trust.

A lot of that potential depends on how we rebuild. Consider the national power grid, where investment in the existing infrastructure may be less fruitful as alternative energy changes how electricity is produced and sold.

Investments and partnerships

Uncertainty about the sectors in need of funds can make investing difficult. A boom in projects could have obvious beneficiaries, such as engineering and construction firms, and oil and natural gas companies, notes Hyzy. Railroads will be busy moving construction materials, while commodities may also improve. “The importance of copper, cement, aluminum and iron rises when there’s a credible plan for rebuilding,” he says.

Nongovernmental organizations and public-private partnerships can also drive returns by sharing the risk of funding.

For more information, contact your U.S. Trust advisor.

Illustrations by Don Foley

*BofA Merrill Lynch Global Research is equity research produced by Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”) and/or one or more of its non-U.S. affiliates. MLPF&S is a wholly owned subsidiary of Bank of America Corporation. Any information presented in connection with BofA Merrill Lynch Global Research is general in nature and is not intended to provide personal investment advice. The information does not take into account the specific investment objectives, financial situation and particular needs of any specific person who may receive it. Investors should understand that statements regardingfuture prospects may not be realized.

IMPORTANT INFORMATION

Investing involves risk. There is always the potential of losing money when you invest in securities.

Projections made may not come to pass due to market conditions and fluctuations.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

Equities Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

Energy and natural resources stocks have been volatile. They may be affected by rising interest rates and inflation, and can also be affected by factors such as natural events (for example, earthquakes or fires) and international politics.

Technology stocks may be more volatile than stocks in other sectors.

Commodities Trading in commodities, such as gold, is speculative and can be extremely volatile. There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest-rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Tangible assets can fluctuate with supply and demand, such as commodities, which are liquid investments, unlike most other tangible investments.

 

When Congress passed the Fixing America’s Surface Transportation (FAST) Act in December 2015, it committed $305 billion to fixing our nation’s ailing infrastructure. Yet, even that may not be enough. The American Society of Civil Engineers estimates a $3.6 trillion gap in the funds needed by 2020, much of which may come from the private sector.

“Infrastructure investment returns could be very significant,” says Chris Hyzy, chief investment officer of U.S. Trust.

A lot of that potential depends on how we rebuild. Consider the national power grid, where investment in the existing infrastructure may be less fruitful as alternative energy changes how electricity is produced and sold.

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Investments and partnerships

Uncertainty about the sectors in need of funds can make investing difficult. A boom in projects could have obvious beneficiaries, such as engineering and construction firms, and oil and natural gas companies, notes Hyzy. Railroads will be busy moving construction materials, while commodities may also improve. “The importance of copper, cement, aluminum and iron rises when there’s a credible plan for rebuilding,” he says.

Nongovernmental organizations and public-private partnerships can also drive returns by sharing the risk of funding.

For more information, contact your U.S. Trust advisor.

Illustrations by Don Foley

*BofA Merrill Lynch Global Research is equity research produced by Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”) and/or one or more of its non-U.S. affiliates. MLPF&S is a wholly owned subsidiary of Bank of America Corporation. Any information presented in connection with BofA Merrill Lynch Global Research is general in nature and is not intended to provide personal investment advice. The information does not take into account the specific investment objectives, financial situation and particular needs of any specific person who may receive it. Investors should understand that statements regardingfuture prospects may not be realized.

IMPORTANT INFORMATION

Investing involves risk. There is always the potential of losing money when you invest in securities.

Projections made may not come to pass due to market conditions and fluctuations.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

Equities Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

Energy and natural resources stocks have been volatile. They may be affected by rising interest rates and inflation, and can also be affected by factors such as natural events (for example, earthquakes or fires) and international politics.

Technology stocks may be more volatile than stocks in other sectors.

Commodities Trading in commodities, such as gold, is speculative and can be extremely volatile. There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest-rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Tangible assets can fluctuate with supply and demand, such as commodities, which are liquid investments, unlike most other tangible investments.