We believe that infrastructure assets, with their stable demand and critical services, such as utilities and telecommunications, offer valuable resilience against economic volatility.
Why do we think this? It’s because infrastructure assets provide a hedge against inflation risk through long-term contracts with inflation-linked pricing, ensuring more predictable income streams.
Infrastructure markets tend to be driven by unique factors
Infrastructure assets also enhance portfolio diversification due to their low correlation with other assets.1 Unique factors, including regulatory changes and technological advancements, often drive infrastructure markets.
The global infrastructure spending megatrend
Global infrastructure spending is a megatrend supported by governments worldwide, driven by demographics and the need for economic growth. Significant investments are also needed in technology and clean energy sectors to achieve net-zero carbon targets (Table 1).
Table 1. Projected investment needed by different sectors to achieve net-zero targets
Source: Systemiq analysis for the ETC (2023); BloombergNEF (2022), Counting Cash in Paris Aligned Pathways – analysis based on IEA Net Zero scenario. Note: Numbers may not sum to totals due to rounding.
Infrastructure equities
We believe an accessible way to invest in infrastructure and capitalize on this megatrend is through listed equities. While past performance isn’t a guarantee of future returns, infrastructure equities have outperformed broader global equities over the long term (Chart 1), suggesting they have the potential to outperform the broader market during downturns and periods of moderating growth.
Chart 1. Long-term performance: Global infrastructure equities vs. Global equities
However, a well-known attraction of infrastructure assets is their relative insulation from increased market volatility (Chart 2).
Chart 2. Short-term performance: Global infrastructure equities vs. Global equities
In the current period of volatility stemming from the global tariff conflict, infrastructure equities have (so far) been exhibiting good resilience.
We believe allocating to infrastructure should be a long-term, strategic decision due to the asset class’s performance, diversification, and yield benefits (infrastructure assets offer approximately 3–4% yield per year).3
Three themes …
Increasing urbanization, energy transition, and digital acceleration are the three pivotal themes shaping future infrastructure investments.
Our global infrastructure equity strategy focuses on these key areas. While our mission remains focused on investing in companies poised to drive economic growth and deliver attractive returns for our clients, we also welcome the next wave of innovation, including artificial intelligence (AI), the Internet of Things, robotics, clean technology, and renewable energy.
… And four sectors
With over $1 billion in assets and a track record spanning over a decade and a half, we aim to provide investors with a unique blend of growth, income, and inflation risk mitigation by focusing on key sectors: transportation, utilities, energy, and communication.4
Global infrastructure investing in action
Domestic electricity
Rising electricity demand in the US is driven by the expansion of data centers, which are essential for supporting AI applications and digital services. Data centers are projected to account for nearly half of the growth in US electricity demand by 2030, surpassing the energy consumption of traditional manufacturing sectors.5
African telecoms
Africa is experiencing rapid data growth, driven by increased mobile phone usage, affordable data plans, and expanding internet infrastructure. The number of internet users has doubled in the last five years.6 Finally, internet penetration in Nigeria stands at 46%, compared to the Organization for Economic Co-operation and Development's average of 87%, indicating a significant growth opportunity.7
Final thoughts
Infrastructure equity enables investors to tap into a significant global megatrend through three long-term themes: urbanization, energy transition, and digital acceleration. By diversifying into this compelling equity subset, we believe investors may potentially boost portfolio resilience and inflation hedge amid current global economic uncertainty and trade tensions.
A version of this article was originally published in Investment Week.
Endnotes
1 Diversification does not ensure a profit or protect against a loss in a declining market.
2 "Overview and key findings." World Energy Investment 2024. International Energy Agency, June 2024. https://www.iea.org/reports/world-energy-investment-2024/overview-and-key-findings.
3 S&P Dow Jones Indices, March 2025.
4 Aberdeen, May 2025.
5 International Energy Agency, April 2025.
6 Statista, January 2024.
7 DataReportal, March 2025.
Important information
Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed and actual events or results may differ materially.
Products investing in infrastructure are subject to the risk of concentrating investments in infrastructure-related companies, which makes them more susceptible to factors adversely affecting issuers within that industry than would a product investing in a more diversified portfolio of securities. These risks include high interest costs in connection with capital construction programs and the costs associated with environmental and other regulations.
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