Infrastructure continues to become an increasingly important component of institutional portfolios. Its diversification benefits, secure income and stability – as demonstrated in recent years – have held it in good stead. The asset class also stands to play a central role in the world’s critical mission to get to net zero.
The energy transition is throwing up both challenges and opportunities for institutional infrastructure investors. More renewable energy projects are needed, but so is greater investment in energy storage and grids, and technological advances, including those relating to hydrogen and nuclear power. But infrastructure investors can also support other major themes, including the decarbonisation of transport, the improvement of countries’ digital connectivity and the development of social infrastructure, including educational, residential and healthcare sectors.
Natural capital – principally in the form of timberland and farmland – is a rapidly growing part of the real assets universe, driven in part by a desire among investors for diversification and secure income. But the urgent net-zero and biodiversity agendas have put these asset classes under a new spotlight. The space is evolving fast and investors need to get up to speed now if they want to participate.
