Investor demand for listed infrastructure is expected to grow, with a shortfall in government infrastructure spending creating significant investment opportunities over the next few decades, according to a report by Standard & Poor’s Fund Services.
The listed infrastructure sector will provide an attractive medium for investors to gain access to developing opportunities, S&P Fund Services analyst Nathan Bode said.
“Growth in the asset class will be driven by the development of new infrastructure in emerging markets, the upgrading of existing infrastructure assets in developed markets, and increasingly, privatisation of infrastructure assets by debt-heavy governments,” he said.
“In our view, the listed infrastructure sector will provide an attractive medium for investors to gain access to this developing opportunity.”
Despite higher volatility and correlation to public equities, Bode said listed infrastructure offers a number of advantages over direct infrastructure investment.
“Public markets provide increased liquidity, superior diversification, and scalability,” he said.
“While there has been and is still likely to be short-term equity noise, over the longer term there should be little difference between listed and direct infrastructure returns. That is, correlation of returns should increase over time.”
