A Quiet Achiever: Global Infrastructure

Global infrastructure encompasses critical assets like utilities, transport networks, energy systems, and communications infrastructure. These long-life assets, including electricity grids, communication towers, and toll roads, offer essential services and generate stable, predictable income streams. Income is often inflation-linked, enabling companies to pass on rising costs to customers. Due to their defensive nature, infrastructure investments typically experience less volatility than shares, providing protection during market downturns. This stability, combined with income and growth potential, makes global infrastructure a valuable component of a diversified portfolio.

Over the past two years, infrastructure underperformed the broader share market due to rising interest rates and volatile bond yields. However, as interest rates and yields decline, the investment outlook is improving. Lower rates enhance the appeal of infrastructure assets, making their stable cash flows more attractive compared to alternatives like bonds. Additionally, many of these assets rely on significant debt financing, so reduced financing costs further boost their performance.

Looking ahead, demand for infrastructure assets is supported by long-term trends, including global population expansion, the rise of the middle class in developing economies, and decarbonisation. Furthermore, its defensive qualities — predictable earnings, inflation protection, and lower sensitivity to economic fluctuations — position infrastructure well for stability and growth in an evolving economic environment.

Our preferred active global listed infrastructure manager, ClearBridge RARE Infrastructure Income, is in the Partners Medium Term, Long Term, and Multi-Asset Income Portfolios.