The survey highlights how infrastructure – a field covering entities such as roads, railways, ports, airports, student accommodation, sports facilities, power stations, data centres, water purification plants and power grids, among others – is a growing area of interest for wealth managers.

A survey of 250 financial advisors in the US finds that 75 per cent of them prefer to work with specialized infrastructure managers, highlighting demand for sector-specific expertise as private wealth increases exposure to the infrastructure asset class.

The findings came from I Squared Capital, an infrastructure investment manager, which has issued its inaugural ISQ OpenInfra Index.

Nearly half of advisors (47 per cent) said clients allocate 6 per cent to 10 per cent of private markets assets under management to infrastructure and most (75 per cent) expect their clients to increase allocations to private infrastructure by 2027.

“Set against a backdrop of indebted governments and the urgent need for investment in AI and essential services, it is evident that we are in the early stages of a global infrastructure supercycle – a clear investment opportunity for individual investors,” Gautam Bhandari, co-founder, global chief investment officer and managing partner of I Squared Capital, said. 

Often coming with embedded inflation protection and benefiting from expected private and public sector spending increases on areas ranging from toll roads and airports to high-speed broadband and data centers, the “infrastructure” space is a growing area of wealth management interest. (See this editorial from 2024 about the asset class.)

As examples of infrastructure being a “hot” topic, in January 2024 asset management titan BlackRock announced that it had acquired Global Infrastructure Partners (GIP). In December 2023, Middle East alternative investment firm Investcorp bought a 50 per cent stake in the $4.8 billion infrastructure business of US firm Corsair Capital. For years, Australia's Macquarie has been a big player in the space.
 
However, infrastructure is not immune to economic shifts, such as the rise in interest rates after the pandemic, or geopolitical worries caused by Russia’s invasion of Ukraine, the closure of the Strait of Hormuz, and other developments. There are also political risks when governments change the bidding process for contracts, for example, or if investment returns disappoint and there are arguments about service delivery.

Other details
The I Squared Capital survey also found that financial advisors most commonly view private infrastructure as a growth driver (35 per cent), followed by diversification (32 per cent) and income generation (17 per cent).

The top trends driving client interest in infrastructure investments include the growth of digital infrastructure, such as data centers and artificial intelligence (50 per cent), long-term structural themes such as population growth, urbanization and reshoring (44 per cent), and inflation alongside broader macroeconomic uncertainty (41 per cent). These dynamics are reinforcing infrastructure’s relevance across a range of portfolio objectives.

However, despite rising interest rates, advisors identified several barriers that are preventing clients from increasing infrastructure exposure, including liquidity concerns and limited product availability (both 48 per cent), policy or regulatory uncertainty and a limited understanding of the asset class (both 44 per cent).

I Squared’s OpenInfra Survey was conducted by Wakefield Research among financial advisors who spend time working in alternative investments, between April 7 and April 21. I Squared Capital, headquartered in Miami, has teams across offices in Abu Dhabi, London, Munich, New Delhi, SĂŁo Paulo, Singapore, Sydney and Taipei.