The role of infrastructure in institutional portfolios will continue to be a prominent theme for asset allocators in 2023, along with the increasing engagement within the investment community on how to manage the ‘S’ – or social factors – within ESG.

This article explores why we believe the infrastructure asset class has a role to play as a foundation portfolio asset class aimed at securing diversified, less volatile, low correlation long-term returns.

The job of asset allocators is never easy, but the recent macro environment has been particularly challenging given correlated weakness in equity and bond markets. Increasing interest rates around the world and the impact they have had on valuations across most asset classes have proven difficult for 60:40 style investors and this has been reflected in negative returns. To us, this again highlights the strategic importance of the infrastructure asset class for asset allocators, given its resilience through economic cycles and its effectiveness as an inflation hedge.