Investment markets can be volatile at the best of times, with impatient investors getting caught up in short-term fluctuations, however, recent months have seen this ramp up even further with US President Donald Trump’s constantly changing tariff announcements.
According to Warryn Robertson, portfolio manager/analyst at Lazard Asset Management Pacific Co., investors who are “fatigued by daily uncertainty” are increasingly searching for more resilient alternatives.
“Few asset classes are more fundamentally tied to real-world reliability than global infrastructure,” Robertson said.
“It’s a sector driven by what we characterise as ‘predictable human behaviours’. Think: wake up, turn the lights on, brush your teeth, take the car or train to work, perhaps fly. All underpinned by essential monopoly-like assets such as electricity, water, and gas – supported by long-term policy framework and robust regulation.”
As a result, he said, global listed infrastructure is among the few asset classes that have “shone through” the market volatility the trade wars have brought, with global listed infrastructure (AUD hedged) index returning 16.3 per cent over the 12 months to 31 May.
Looking at specific markets, Robertson said there are better opportunities outside the US, specifically pointing to Europe as a key area.
“While select US assets remain attractive, our portfolio is heavily tilted towards European regulated utilities – holding over 36 per cent of the portfolio in these stocks – including companies like National Grid (Great Britian’s electricity transmission network), Terna (Italy’s electricity network), and Snam (Italy’s gas transmission operator) which are trading at 20-year valuation lows,” he added.
“Our view of European regulated infrastructure can be best surmised as ‘boring but booming’. The growth outlook for European regulated utilities is stronger than it has been in decades.
“Governments in the UK and Italy are relying on utility networks to connect remote renewable energy sources to urban centres. Meanwhile, new legislation is mandating water utilities to modernise infrastructure to address climate-driven challenges like flooding and drought.”
The portfolio manager also argued that there doesn’t need to be a choice between listed and private infrastructure investments and that they could play “complementary roles”.
“Listed infrastructure excels at capturing long-duration, low-volatility returns from high-quality assets like regulated utilities and toll roads. These are segments where pricing discipline is key and operational upside is minimal,” he said.
“Private equity, by contrast, may be better suited to more complex or transitional infrastructure assets, where genuine value can be added through operational improvement. In this instance, private equity’s worth is in extracting value from underperforming or non-core assets where management intervention can materially affect outcomes.”
Ultimately, he said, listed infrastructure provides greater levels of transparency, flexibility, and repeatability.
“While mark-to-model valuations in private equity can mask volatility, listed valuations allow investors to lean into dislocations and rotate capital dynamically.”
“The goal isn’t to choose one over the other but to position each where it provides the most benefit to the end investor’s portfolio.”
