Is there a listed infrastructure asset class?

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In this video, we ask the question: does focusing on listed infrastructure stocks create diversification benefits previously unavailable to large investors already active in public markets?

This question arises from what we call the “infrastructure investment narrative”: a set of investment beliefs commonly held by investors about the investment characteristics of infrastructure assets.

According to this narrative, the “infrastructure asset class” is less exposed to the business cycle because of the low price-elasticity of infrastructure services. Furthermore, the value of these investment is expected to be mostly determined by income streams extending far into the future, and should thus be less impacted by current events.

According to this intuition, listed infrastructure may provide diversification benefits to investors since they are expected to exhibit low return covariance with other financial assets. In other words, listed infrastructure is expected to exhibit sufficiently unique characteristics to be considered an “asset class” in its own right.

This video summarise our findings and provides some elements for discussion and future research.

→ You can also read the full paper online here