A generational opportunity in listed infrastructure?
Listed infrastructure is returning to centre stage for investors amid structurally sound demand, improving yield prospects, still attractive valuations and increasingly strong support from private capital.
According to Tom Levering, Global Industry Analyst and Portfolio Manager of the Wellington Enduring Infrastructure Assets Fund, and Joy Perry, Investment Director, of Wellington Management, the current picture reflects a combination of favourable factors that, taken together, outline a long-term investment opportunity.
"Thousands of billions of investment in the global power grid alone, including in relation to the ongoing transition to renewable energy sources," Tom Levering points out.
With over 30 years of experience in analysing and investing in the infrastructure sector, the Wellington Management team believes it has never seen a better time to invest. In many ways, the current investment opportunity in infrastructure can truly be considered generational. Looking ahead to 2026 and beyond, the attractiveness of this opportunity can be seen through four closely related perspectives, starting with the energy theme, with a focus on electricity and natural gas. The team points out that geopolitical tensions, such as those triggered by recent conflicts in the Middle East, have at times highlighted the vulnerability of LNG (liquefied natural gas) transport routes. It continues to monitor this volatility as it arises, but sees it as distinct from the long-term thesis in favour of gas infrastructure. Here are the four key perspectives:
- First, there is an outstanding structural growth opportunity.
- Second, the risk-return ratio has clearly improved, because returns are rising without a corresponding increase in risk.
- Third, valuations remain attractive, especially in light of the higher growth and return potential.
- Finally, financing this growth has become easier, because private infrastructure is providing capital at lower costs to support listed infrastructure expansion.
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The views expressed are those of Wellington Management's experts as of the date of writing. Other teams may have different opinions and make different investment decisions. The final value of the investment may be higher or lower than the initial investment. Although the third-party data used is believed to be reliable, its accuracy is not guaranteed. Intended for professional and institutional investors only.
