The impact of unlisted infrastructure assets on portfolios

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It appears the global low interest rate environment is continuing to spur investor appetite for alternative asset classes – like unlisted infrastructure – that can offer potentially higher risk-adjusted returns. This comes at a time of increased uncertainty around the return outlook for ‘traditional’ asset classes, notably equity and fixed income. Indeed, we believe the diversification benefits of alternative asset classes are likely to be highly sought after as we enter the post-recession global economic environment.

Unlisted infrastructure is moving out of the ‘alternatives’ category and sitting beside other unlisted asset classes such as unlisted property. This is especially true for long-term patient capital where infrastructure portfolios can provide a strong foundation for relatively stable long term returns.

Alex Joiner
IFM Chief Economist

This article is an abridged version of our recent white paper, The impact of infrastructure on portfolio efficiency and diversification (Mar 2021)1 . It suggests that unlisted infrastructure does have the potential to contribute to improved risk/return outcomes from a portfolio perspective. This adds to the relatively small but growing body of literature supporting what is already relatively well known: unlisted infrastructure has the potential to provide solid returns in a low-yielding world that can facilitate effective portfolio diversification and contribute to improved risk adjusted returns.

We also demonstrate how excluding unlisted infrastructure from a portfolio, and an over-reliance on traditional asset classes of fixed income and equites, risks leading to a less efficient portfolio than may otherwise be the case.

1 The full version of the white paper is available on request.

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Meet the authors


Alex Joiner

Alex Joiner is Chief Economist at IFM Investors. He is responsible for the firm’s economic, financial market and geopolitical risk analysis that is key in IFM’s investment process. In this capacity he engages with IFM’s domestic and global clients on macro-investment trends and themes.

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Frans van den Bogaerde

Frans supports the Chief Economist with the firm’s economic, financial market, and policy analysis and forecasting. He holds a Bachelor of Commerce (Finance & Economics) with Honours in Finance (First Class) from the University of Melbourne.

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