Infrastructure within a Portfolio Context

Infrastructure is the backbone of economies and societies, and it is not only governments that invest in digital, energy, transport, and utilities companies. Increasingly, institutional investors have increased their allocations to infrastructure as an asset class. In this article, the authors empirically evaluate four main motives to include infrastructure in the investment mix. Their results show that portfolio diversification, downside risk protection, and stable income yields are all valid reasons for investing in infrastructure. However, the evidence on infrastructure’s inflation-hedging capabilities is less compelling, despite its significant role in asset-liability management frameworks. This article offers valuable empirical insights into infrastructure as an investable asset class that has important applications for portfolio construction.