As part of our role in managing client portfolios, we continually assess how different asset classes can work together to achieve stability and sustainable growth. Infrastructure has long been a strategic component in that mix. From utilities and transport networks to renewable energy facilities and digital communications, these assets form the backbone of the economy and remain essential regardless of market conditions. 

Stable Cash Flows and Lower Volatility 

One of the main reasons we include infrastructure in client portfolios is the reliability of its income streams. Many infrastructure assets operate as regulated monopolies or under long-term contracts, creating a level of predictability that is uncommon in other investments. Whether it’s a toll road, an electricity grid, or a water utility, revenues tend to remain steady even in challenging markets. This consistency helps reduce overall portfolio volatility, while the asset class’s lower correlation with equities and bonds enhances diversification. 

Inflation Protection in the Current Environment 

Infrastructure can also play a key role in protecting portfolios against inflation. Many projects have revenues linked to inflation indices, allowing income to rise in step with the cost of living. In the current economic climate, where inflation remains elevated, this feature is particularly valuable in helping preserve the real value of client portfolios over the long term. 

Accessing Infrastructure: Listed and Private Markets 

We use both listed and private markets to gain infrastructure exposure. Listed infrastructure—via investment trusts, specialist funds, or publicly traded companies—offers liquidity and transparency, making it easier to adjust holdings in response to changing conditions. Private infrastructure, while less liquid, can offer additional diversification and direct ownership of high-quality assets. Over the long term, returns from both have been broadly similar, often around 9% annualised. The right balance depends on client objectives, time horizons, and liquidity needs. 

Opportunities in UK Infrastructure Investment Trusts 

For UK investors, infrastructure investment trusts listed on the London Stock Exchange offer a straightforward and regulated way to access this asset class. These trusts often hold a broad mix of assets supported by inflation-linked contracts, providing the potential for steady yields. While some trusts currently trade at discounts to their net asset value—driven by sentiment or interest rate moves rather than asset fundamentals—we find that larger, well-diversified trusts are better positioned to deliver consistent outcomes. 

Long-Term Growth Drivers for Infrastructure 

The case for infrastructure is strengthened by powerful structural trends. The UK’s transition to net zero will require major investment in renewable energy, energy storage, and grid upgrades. The digital economy’s expansion is driving demand for data centres, fibre networks, and advanced communications infrastructure. Governments are also prioritising infrastructure renewal to stimulate growth and meet environmental targets. These trends present ongoing opportunities for well-managed portfolios. 

Our Investment View 

The house view is that we see infrastructure as more than just a diversifier—it’s a foundation for portfolio resilience.  

When constructing diversified portfolios designed to deliver risk-adjusted returns in line with an agreed client mandate, we see infrastructure as a highly suitable component. Its combination of stable, inflation-linked income, low correlation with traditional asset classes, and exposure to long-term economic trends allows us to enhance portfolio resilience without compromising return objectives. By selecting the right blend of listed and private infrastructure holdings, we can align the asset class’s characteristics with each client’s risk tolerance, time horizon, and strategic objectives—ensuring it works as part of a disciplined, mandate-driven investment approach. 

Key Takeaways 

• Infrastructure offers stable, inflation-linked income streams. 
• Low correlation with equities and bonds helps smooth portfolio returns. 
• Listed and private markets both provide strong long-term performance potential. 
• UK-listed investment trusts offer accessible, regulated exposure. 
• Structural trends in energy and digital infrastructure support future growth. 

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Important Information

The contents of this article are for information purposes only and do not constitute advice or a personal recommendation. Investors are advised to seek professional advice before entering into any investment arrangements. Please note that we are not tax experts, and you should seek professional advice concerning your personal tax affairs from qualified advisers, such as tax accountants.

Please also note that the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.