Global infrastructure: Listed securities offer opportunities
As global infrastructure needs outpace government resources by trillions of dollars, private capital is stepping in to bridge the gap. Discover why infrastructure’s unique characteristics – from stable cash flows to inflation protection – make it a compelling asset class for institutional portfolios seeking diversification and resilient returns.
Our complex framework of roads, waterways, utilities and airports must be maintained and expanded to meet evolving global needs. In the past, government has been largely responsible for creating and maintaining infrastructure. However, private funding has become an increasingly important resource as governments find themselves unable to cope with the challenges of modern infrastructure. Thus infrastructure has transformed from something that consumes tax dollars to a potential investment opportunity.
The pressing global need for infrastructure development and maintenance will require massive investment in the coming decades. According to the Global Infrastructure Hub, global spending on basic infrastructure—transport, power, water and communications—is forecast to total $79 trillion from 2016 through 2040, while the actual investment need is $94 trillion. That means approximately $3.7 trillion is needed each year, more than the annual economic output of the United Kingdom.
Population growth and global urbanization are straining existing infrastructure and creating demand for new development. The world’s urban population is projected to add almost one billion people by 2050, with most of the increase concentrated in Asia and Africa. This unprecedented migration into cities will require equally vast investment in roads, water, communications and power. Meanwhile, developed countries face the urgent task of replacing and upgrading aging infrastructure.
As private markets are invited to assist, an investment universe has emerged with compelling characteristics: monopolistic qualities with high barriers to entry, inelastic demand that makes infrastructure less sensitive to business cycles, stable cash flows from long-term contracts, inflation protection through fee linkages, and durability with assets lasting more than 50 years. These qualities position infrastructure as a distinct asset class with potentially stable, income-oriented returns that are not highly correlated with other major asset classes.
Unlock infrastructure’s investment potential
Explore how the $15 trillion global infrastructure funding gap creates opportunities for private investors, the unique characteristics that make infrastructure a compelling asset class, and the different approaches to accessing this growing market.