- Numerous risk and asset allocation models are evolving to incorporate listed infrastructure funds as analysts suggest that UK investors might gain improved growth exposure during times of volatility and high inflation.
- We analysed 31 IA Infrastructure funds and identified that just 16.1% have a history of outperformance within the sector, receiving a top 4 or 5 star rating.
- Our analysis identifies that 67.8% of the funds analysed underperformed and received a poor 1 or 2 star rating.
- The Cohen & Steers Global Listed Infrastructure fund was one of the top performing funds over the past 1, 3 & 5 years, with growth of 25.50%, 25.79% & 35.47% respectively.
In today’s rapidly evolving world, infrastructure investment is emerging as one of the most critical opportunities for sustainable investment growth.
Investment analysts are increasingly recommending listed infrastructure funds for UK investor portfolios, highlighting their stability, inflation resilience, and growth potential as key reasons.
This article explores why infrastructure investments are gaining traction and profiles five standout funds that have consistently outperformed over 1, 3, and 5 years. We also provide access to a performance and rating analysis of all 31 funds currently classified within the IA Infrastructure sector.
Infrastructure Fund Performance Summary
We analysed 31 infrastructure funds within the IA Infrastructure sector available to UK investors, assessing their performance and ratings over the past 1, 3, and 5 years.
Our analysis reveals that only a small portion of funds achieved high ratings, with 4 funds receiving a 4-star rating and just 1 fund earning the top 5-star rating. These high-performing funds have shown consistent strength, regularly outperforming the majority of their sector peers across various time frames.
However, more than two-thirds (67.8%) of funds in this sector underperformed with 11 funds receiving a poor performing 1 or 2 star rating based on their performance over the past 1, 3, and 5 years.
5 Reasons Infrastructure Funds Strengthen UK Portfolios in Uncertain Times
Infrastructure funds have become increasingly important in portfolios over recent years, especially as market volatility has intensified. They offer UK investors a unique and resilient investment opportunity, particularly in today’s uncertain economic landscape. As an asset class, infrastructure brings several attractive features to a well-diversified portfolio. These funds are designed to offer stable, inflation-linked cash flows and often demonstrate lower volatility compared to traditional equities. In a period marked by economic headwinds, inflationary pressures, and fluctuating interest rates, the defensive characteristics of infrastructure make it an appealing option for those seeking both growth and stability.
There are 5 key benefits to including infrastructure funds as part of a diversified portfolio.
1. Stability During Times of Uncertainty
One of the primary benefits of infrastructure funds is their resilience. Infrastructure assets such as utilities, transportation networks, renewable energy facilities, and telecommunications towers play a fundamental role in society. They provide essential services that remain in demand regardless of economic cycles, leading to more predictable revenue streams. This stability becomes particularly valuable during economic downturns, as infrastructure investments can help mitigate the impact of market volatility on an investor’s portfolio.
2. Inflation Protection
In times of high inflation, infrastructure funds are especially beneficial as many infrastructure assets include inflation-linked revenue mechanisms. For example, utility companies often have the ability to pass on increased costs to consumers, enabling them to maintain or even grow their income in inflationary periods. This inflation-protected income stream makes infrastructure an effective hedge, which can safeguard the purchasing power of an investor’s portfolio and offer peace of mind when other assets may be struggling to keep up with inflationary pressures.
3. Attractive Yields and Long-Term Growth Potential
Many infrastructure funds deliver attractive dividend yields, which are often linked to inflation or long-term contracts. These yields make infrastructure funds a strong option for income-focused investors looking for reliable, long-term returns. Additionally, infrastructure sectors like renewable energy, data infrastructure, and digital assets are expected to experience significant growth, driven by global trends towards sustainability and digital transformation. By investing in infrastructure funds, UK investors can benefit from the expansion of these high-growth sectors while securing a reliable income stream.
4. Long-Term Trends Supporting Infrastructure Growth
The demand for infrastructure investment is only expected to grow as governments, including the UK, continue to prioritise infrastructure as a means to foster economic resilience and support the transition to a low-carbon future. This trend is reinforced by policy support, with initiatives like the UK Infrastructure Bank directing capital toward renewable energy, digital infrastructure, and other sectors poised for expansion. Infrastructure’s alignment with Environmental, Social, and Governance (ESG) principles further strengthens its appeal to investors focused on sustainability, as many funds incorporate ESG considerations, adding another layer of long-term value and responsibility to their portfolios.
5. Enhancing Portfolio Resilience
Incorporating infrastructure funds into a diversified portfolio offers investors a unique way to enhance resilience. Unlike many asset classes that are highly correlated with market movements, infrastructure investments tend to be more insulated from broader economic fluctuations. This can reduce overall portfolio risk and provide a stabilising effect, especially during turbulent periods. By diversifying into infrastructure, investors can achieve a balanced approach that prioritises steady growth, income generation, and capital preservation over time.
5 Top Infrastructure Funds
The table below lists 5 of the best performing Infrastructure funds over the past 1, 3 & 5 years.
Each of these funds has an impressive history of top performance relative to their sector peers over both the short and long term with each consistently ranking among the top performing funds within the IA Infrastructure sector.
abrdn Global Infrastructure Equity Platform 1 Fund
The abrdn Global Infrastructure Equity Platform 1 Fund’s performance can be attributed to its disciplined investment approach, focusing on high-quality, core infrastructure assets with stable, long-term growth potential. By targeting companies with strong cash flows, robust business models, and high barriers to entry, the fund has positioned itself to capture consistent value in the infrastructure sector. This approach has supported its 1-year return of 19.74%, above the sector average of 17.54%.
Over 3 and 5 years, the fund’s returns of 16.26% and 39.09%, respectively, have exceeded sector averages of 9.64% and 19.33%. This consistent outperformance reflects both effective stock selection and a diversified approach across key sub-sectors like renewable energy, transportation, and digital infrastructure.
With 5 year returns that ranks 2nd out of 24 funds, the fund has demonstrated a strong track record in balancing growth and risk.
Cohen & Steers Global Listed Infrastructure Fund
The Cohen & Steers Global Listed Infrastructure Fund has delivered strong performance across multiple periods, attributed to its focused approach within global listed infrastructure. Over the past 1 year, the fund achieved a return of 25.50%, placing it 1st in the sector. This top ranking highlights the fund’s ability to capture growth opportunities within the infrastructure space through effective positioning and active management.
In the past 3 years, the fund returned 25.79%, ranking 2nd in the sector. This sustained performance reflects a strategic allocation across essential infrastructure subsectors such as utilities, transportation, and communications, which provide stable demand and robust cash flows. The fund’s focus on income-generating assets with defensive characteristics has likely contributed to its resilience and consistent returns.
Over 5 years, the fund’s 35.47% growth positioned it 4th in the sector, demonstrating its strength in delivering competitive long-term returns. The Cohen & Steers Global Listed Infrastructure Fund’s consistent success across 1, 3, and 5 years underscores its effective balance of growth and stability, making it a compelling option for investors seeking reliable exposure to global infrastructure assets.
Lazard Global Listed Infrastructure Equity Fund
Established in 2012, the Lazard Global Listed Infrastructure Equity Fund manages £1.12 billion in assets. Its primary objective is to achieve long term total returns through income and capital appreciation.
This actively managed fund invests in infrastructure companies with a minimum market capitalisation of $250 million, ensuring a focus on stable and reliable firms. It follows a "Preferred Infrastructure" philosophy, which targets companies that own physical infrastructure assets with specific characteristics, such as revenue certainty, profitability, and longevity.
This strategic focus has yielded strong results, with returns of 19.37%, 20.77%, and 28.32% over the past 1, 3, and 5 years, respectively. These figures significantly outperform the sector averages of 17.54%, 9.64%, and 19.33% for the same periods.
The fund’s portfolio includes major holdings in companies like National Grid, Ferrovial, and Vinci, which provide vital services across regions such as the Eurozone, the UK, and the US. This commitment to high-quality infrastructure assets helps the fund maintain steady returns, appealing to investors seeking long-term stability and income growth.
Russell Investments Global Listed Infrastructure Fund
The Russell Investments Global Listed Infrastructure fund aims to achieve long term capital growth by investing at least 80% of its assets in global equities of companies involved in infrastructure projects. The fund seeks to outperform the S&P Global Infrastructure Index (USD) - Net Returns by 2% over the medium to long term.
Over the past year, the fund has generated a return of 21.30%, outperforming the sector’s average of 17.54%. Similarly, over 3 years, it posted a 25.65% return, far exceeding the sector’s 9.64% average. Over 5 years, the fund achieved growth of 27.31%, significantly surpassing the 19.33% sector average. This outperformance places it among the top-performing Infrastructure funds in its sector.
The fund’s success is supported by a well-diversified portfolio spanning key sectors such as utilities, Industrials, and energy. Notable holdings include NextEra Energy, Transurban Group, and Cheniere Energy Inc. These sectors offer stable cash flows and lower sensitivity to market fluctuations, making them a strong choice for sustained, long-term growth.
Geographically, the fund has a substantial presence in the United States (around 43.42%), Australia, Europe, and emerging markets, offering diversified infrastructure investment opportunities. This diversified approach, combined with an active, multi-manager structure, allows Russell Investments to balance risk and return. The fund also incorporates ESG (Environmental, Social, and Governance) considerations, which further attract investors interested in responsible and sustainable investing.
WS Macquarie Global Infrastructure Securities Fund
The WS Macquarie Global Infrastructure Securities Fund is designed to deliver a total return through a blend of income and capital growth, after costs and charges over a typical five-year market cycle. To accomplish its goal, the fund allocates directly at least 80% of its assets to global infrastructure companies, including those in emerging markets. These companies manage physical infrastructure assets, such as toll roads, airports, railways, and utility networks for electricity, gas, water, and sewage systems.
With £196.36 million in assets, the fund has consistently outperformed its sector peers across various time frames. Over the past year, it delivered growth of 19.08%, above the sector average of 17.54%. Its 3 year return is particularly exceptional at 30.10%, ranking it 1st out of 27 funds in its category. Over 5 years, it achieved growth of 37.52%, far surpassing the sector average of 19.53%, consistently placing it among the top performers in the IA Infrastructure sector.
Macquarie’s investment team manages the fund actively, making adjustments based on economic trends and regional developments. The fund’s strategic focus on core infrastructure assets, combined with geographic diversification, has supported sustained growth, allowing it to stand out among its peers.
Summary
Investment analysts are now increasingly recommending that UK portfolios include listed infrastructure funds, valued for their stability, inflation resilience, and growth potential. Known for their stable, inflation-linked cash flows, listed infrastructure assets serve as an effective hedge against inflation. For example, the FTSE Developed Core Infrastructure Index, which tracks global infrastructure assets, delivered a strong return of approximately 15.7% in 2021 despite high inflation, underscoring its defensive qualities. This resilience contrasts sharply with traditional equities, which often falter in inflationary environments.
Listed infrastructure funds provide access to a broad range of sectors, from renewable energy and transportation to data infrastructure, each positioned for growth amid global trends in sustainability and digitalisation. This sector diversification - particularly in renewable power and utilities - helps smooth volatility and enhances long-term performance, capitalising on infrastructure’s reliable revenue streams.
However, our analysis shows that not all infrastructure funds consistently deliver competitive returns. In this small but competitive sector, it’s crucial for investors and advisers to identify high-quality options that support long-term growth and value.
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