Infrastructure’s broadening investment universe: A snapshot
As the investable universe has expanded, so too have the options to invest in it. Infrastructure now spans not only a broader range of sectors, but also different risk profiles, capital structures and investment vehicles–giving investors more tools to achieve their portfolio goals.
What’s driving the expansion of the investable universe?
Digitalization, decarbonization and deglobalization are reshaping the global economy. Artificial intelligence has become the dominant theme within digitalization, while rising energy demand has moved the focus from energy transition to energy addition. Deglobalization has sped up and expanded into data sovereignty and industrial policy.
Enormous investment is needed to support these evolving trends. That includes maintaining and modernizing existing infrastructure, as well as building new assets, such as digital networks, energy systems and more resilient supply chains. The result is a growing investable universe, spanning both traditional and newer forms of infrastructure.
Infrastructure's broadening investable universe
Investment Strategies
Infrastructure strategies generate returns primarily from three sources: cash yield, earnings growth, and multiple expansion and development. The mix of each varies across strategies, so investors can select among them based on which return drivers best align with their objectives. Infrastructure debt and core strategies offer steady cash yield, from coupon payments in the case of debt and from contracted or regulated cash flows in the case of core strategies. For core-plus and value-add strategies, earnings growth becomes a more important source of returns. It may be driven by inflation-linked pricing, volume or GDP growth, or planned capital reinvestment. Multiple expansion and development is a larger driver of returns in value-add and opportunistic strategies. It can come from operational improvements, significant capacity expansion or the development of new projects. Other market factors can also influence the timing and size of returns, including interest rates, inflation, economic growth, M&A activity and market valuations.
Capital Structure
Infrastructure investors also now have more options to invest across the capital structure. They have mainly focused on equity strategies and a small number of infrastructure debt strategies. But demand has been growing for debt and structured equity.
Infrastructure debt has historically offered higher yields than corporate bonds and Treasuries, with similar returns to broader private credit.1 Higher base rates and wider lending spreads have brought return targets closer to those of core infrastructure equity, while debt remains more senior in the capital structure and offers more downside protection. Infrastructure debt has historically experienced lower default rates and higher recovery rates than broad corporate loans.2
Structured equity sits between equity and debt. It typically combines contractual income and downside protection with some participation in future asset appreciation, such as through preferred equity with warrants. Another advantage is that the capital can be designed not just to finance an asset, but also to solve a specific growth, liquidity, valuation or ownership challenge.
Adding infrastructure debt and structured equity can help diversify return sources by providing exposure to more senior parts of the capital structure, which can help enhance downside protection. They can both generate attractive returns throughout the credit cycle, particularly when bank lending is constrained or refinancing pressure is higher.
Investment Vehicles
The ideal blend of investment vehicles will depend on how quickly an investor wants to deploy capital, how much liquidity they need and their desired sources of return. Open-end funds tend to put money to work faster. They typically hold operating assets that generate income and may also offer periodic liquidity. Closed-end funds generally lock up capital for longer but investors are typically compensated with an illiquidity premium. Direct and co-investments can increase concentration. How and when cash is returned to investors depends mainly on the performance of the individual assets or when they are sold or refinanced.
Having a mix of closed- and open-end funds means that if distributions from a closed-end fund are slower than expected, an open-end allocation could provide an additional source of liquidity. As portfolio needs and market conditions evolve, investors may need to adjust the pace of their commitments and the mix of vehicles to meet cash-flow requirements.
What does all this mean for investors?
Many existing infrastructure allocations may not fully capture this broadening investment universe, or may lack exposure to some of the most significant structural growth trends. As the asset class evolves, the objective is not simply to increase exposure to infrastructure, but to construct an integrated portfolio that reflects an investor’s specific objectives, constraints and existing exposures through a careful selection of sectors, strategies, capital structures and investment vehicles.
We believe this is an opportune time to revisit infrastructure allocations and ensure they reflect this broader opportunity set and are calibrated to best achieve portfolio objectives.
Endnotes
1. Past performance is no guarantee of future results.
2. World Bank Group, Infrastructure Monitor 2024, May 2025 (https://ppp.worldbank.org sites/default/files/2025-06/infrastructure-monitor-2024-report.pdf)
Disclosure
This commentary and the information contained herein are for educational and informational purposes only and do not constitute, and should not be construed as, an offer to sell, a solicitation of an offer to buy, or an advertisement for, any securities, related financial instruments or investment advisory services. This commentary discusses broad market, industry or sector trends, or other general economic or market conditions. It is not intended to provide an overview of the terms applicable to any products sponsored by Brookfield Asset Management Ltd. and its affiliates (together, “Brookfield”).
This commentary contains information and views as of the date indicated and such information and views are subject to change without notice. Certain of the information provided herein has been prepared based on Brookfield’s internal research and certain information is based on various assumptions made by Brookfield, any of which may prove to be incorrect. Brookfield may have not verified (and disclaims any obligation to verify) the accuracy or completeness of any information included herein including information that has been provided by third parties and you cannot rely on Brookfield as having verified such information. The information provided herein reflects Brookfield’s perspectives and beliefs.
Investors should consult with their advisors prior to making an investment in any fund or program, including a Brookfield-sponsored fund or program.
Explore More
Data infrastructure: How connectivity and constraints shape opportunity
Midstream infrastructure: Essential assets in an undersupplied energy system
