Home Insights Listed infrastructure A complementary allocation in an institutional investor’s portfolio

A complementary allocation in an institutional investor’s portfolio

April 25, 2025 | 2 min read
Emily Foshag, CFA
Portfolio Manager, Listed Infrastructure
Download PDF
linkedin icon link icon

At-a-glance

  • Many investors have achieved infrastructure equity exposure exclusively through the private markets, yet the asset class can also be accessed through listed infrastructure equity strategies.
  • The long-term return drivers of listed infrastructure equity are similar to those of private infrastructure equity, and long-term investment returns have been comparable.
  • Listed infrastructure equity typically offers greater liquidity and diversification potential, lower fees, and lower minimum investment requirements relative to private infrastructure equity, offering favorable investment characteristics which at least partially offset its higher expected return volatility.
  • Common use cases for listed infrastructure equity in an institutional investor’s portfolio include portfolio completion or to access relative value opportunities.

Since its emergence as an asset class in the 1990s, infrastructure has increasingly been featured as a distinct allocation within institutional investment portfolios. Traditional infrastructure assets typically share specific attributes that support the delivery of steadier investment returns throughout an economic cycle. These businesses tend to provide services that are essential to our society and operate under regulated or contracted frameworks that provide investors with a high degree of revenue and cash flow visibility. Typically, income is also a meaningful component of investment returns.

Historically, many investors have achieved infrastructure equity exposure through the private markets, either by investing in private equity fund structures or into assets directly. This approach closely aligns with the role other private markets asset classes, such as private equity and private real estate, play in a portfolio. It is also possible to access the infrastructure asset class through listed equity strategies, however. The long-term return drivers of listed infrastructure equity tend to closely mirror those of private infrastructure equity, and as such, long-term investment returns have been comparable.
Listed Infrastructure
Real estate
Disclosure

For Financial Professional/Institutional use only in the U.S. May not be used with the Public. For Institutional, Professional, Qualified and/or Wholesale Investor Use only in other permitted jurisdictions as defined by local laws and regulations.

Risk Considerations
Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal. Infrastructure issuers may be subject to regulation by various governmental authorities and may also be affected by governmental regulation of rates charged to customers, operational or other mishaps, tariffs, and changes in tax laws, regulatory policies, and accounting standards. Foreign securities involve special risks, including currency fluctuation and lower liquidity. Some global securities may represent small and medium-sized companies, which may be more susceptible to price volatility than larger companies. Inflation and other economic cycles and conditions are difficult to predict and there Is no guarantee that any inflation mitigation/protection strategy will be successful. Asset allocation and diversification do not ensure a profit or protect against a loss.

Notes to exhibits
Indices are unmanaged and do not take into account fees, expenses, and transaction costs and it is not possible to invest in an index. The MSCI World Infrastructure Index was launched on Jan 22, 2008. The MSCI World Core Infrastructure Index was launched on Jan 16, 2015. FTSE Global Core Infrastructure 50/50 Index was launched on March 15, 2015. All performance presented prior to the launch date is back-tested performance. The back-test calculations are hypothetical and are based on the same methodology that was in effect when the index was officially launched. However, back tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index. All back-tested index values for periods prior to the launch date of an index are provided for informational and educational purposes only.

Exhibit 3: Volatility calculated as annualized standard deviation of quarterly returns for Private Markets asset classes and annualized standard deviation of monthly returns for Public Markets asset classes, as consistent with industry standards.

Important information
This material covers general information only and does not take account of any investor’s investment objectives or financial situation and should not be construed as specific investment advice, a recommendation, or be relied on in any way as a guarantee, promise, forecast or prediction of future events regarding an investment or the markets in general. The opinions and predictions expressed are subject to change without prior notice. The information presented has been derived from sources believed to be accurate; however, we do not independently verify or guarantee its accuracy or validity. Any reference to a specific investment or security does not constitute a recommendation to buy, sell, or hold such investment or security, nor an indication that the investment manager or its affiliates has recommended a specific security for any client account.

Subject to any contrary provisions of applicable law, the investment manager and its affiliates, and their officers, directors, employees, agents, disclaim any express or implied warranty of reliability or accuracy and any responsibility arising in any way (including by reason of negligence) for errors or omissions in the information or data provided. All figures shown in this document are in U.S. dollars unless otherwise noted.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

This material is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

This document is issued in:

  • The United States by Principal Global Investors, LLC, which is regulated by the U.S. Securities and Exchange Commission.
  • Europe by Principal Global Investors (Ireland) Limited, 70 Sir John Rogerson’s Quay, Dublin 2, D02 R296, Ireland. Principal Global Investors (Ireland) Limited is regulated by the Central Bank of Ireland. Clients that do not directly contract with Principal Global Investors (Europe) Limited (“PGIE”) or Principal Global Investors (Ireland) Limited (“PGII”) will not benefit from the protections offered by the rules and regulations of the Financial Conduct Authority or the Central Bank of Ireland, including those enacted under MiFID II. Further, where clients do contract with PGIE or PGII, PGIE or PGII may delegate management authority to affiliates that are not authorized and regulated within Europe and in any such case, the client may not benefit from all protections offered by the rules and regulations of the Financial Conduct Authority, or the Central Bank of Ireland. In Europe, this document is directed exclusively at Professional Clients and Eligible Counterparties and should not be relied upon by Retail Clients (all as defined by the MiFID).
  • United Kingdom by Principal Global Investors (Europe) Limited, Level 1, 1 Wood Street, London, EC2V 7 JB, registered in England, No. 03819986, which is authorised and regulated by the Financial Conduct Authority (“FCA”).
  • United Arab Emirates by Principal Investor Management (DIFC) Limited, an entity registered in the Dubai International Financial Centre and authorized by the Dubai Financial Services Authority as an Authorised Firm, in its capacity as distributor / promoter of the products and services of Principal Asset Management. This document is delivered on an individual basis to the recipient and should not be passed on or otherwise distributed by the recipient to any other person or organisation.
  • Singapore by Principal Global Investors (Singapore)Limited (ACRA Reg. No. 199603735H), which is regulated by the Monetary Authority of Singapore and is directed exclusively at institutional investors as defined by the Securities and Futures Act 2001. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
  • Australia by Principal Global Investors (Australia) Limited (ABN 45 102 488 068, AFS Licence No. 225385), which is regulated by the Australian Securities and Investments Commission and is only directed at wholesale clients as defined under Corporations Act 2001.
  • This document is marketing material and is issued in Switzerland by Principal Global Investors (Switzerland) GmbH.
  • Hong Kong SAR (China) by Principal Asset Management Company (Asia) Limited, which is regulated by the Securities and Futures Commission. This document has not been reviewed by the Securities and Futures Commission.
  • Other APAC Countries/Jurisdictions. This material is issued for Institutional Investors only (or professional/sophisticated/qualified investors, as such term may apply in local jurisdictions) and is delivered on an individual basis to the recipient and should not be passed on, used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

© 2025 Principal Financial Services, Inc. Principal®, Principal Financial Group®, Principal Asset Management, and Principal and the logomark design are registered trademarks and service marks of Principal Financial Services, Inc., a Principal Financial Group company, in various countries around the world and may be used only with the permission of Principal Financial Services, Inc. Principal Real Estate Investors is a dedicated real estate investment management group within Principal Global Investors. Principal Asset Management℠ is a trade name of Principal Global Investors, LLC.

MM14449 | 04/2025 | 4393889-122026 
About the author