Infrastructure’s Historical Outperformance? Check!

Infrastructure IRR vs. PME

This week, we’re taking a look at private infrastructure. We continue to see value in?manager selection?in this space with top-half strategies adding several hundred basis points of outperformance across vintage years. Like all things in the?private markets, we see tremendous value in?portfolio construction?and careful manager selection. Alpha or not, the asset class has outperformed the public markets every single vintage year since 2012, as seen in this chart.?

Downside protection, attractive total returns, low volatility and the potential for additional alpha – what more can you ask for? How about inflation protection as well, because, why not? While the results aren’t fully tabulated yet, early indicators suggest that private infrastructure is checking off many of the boxes on this wish list, especially as we navigate the modern era’s first prolonged period of elevated inflation.??

Learn more in this highlight from our 2024 Real Assets Market Overview.?

Catch up on Chart of the Week.

Definitions?

DJ Brookfield Global Infrastructure Index – The DJ Brookfield Global Infrastructure Index is designed to measure the performance of companies globally that are operators of pure-play infrastructure assets.??

Infrastructure – An investment strategy that invests in physical systems involved in the distribution of people, goods, and resources.??

PME (Public Market Equivalent) – Calculated by taking the fund cash flows and investing them in a relevant index. The fund cash flows are pooled such that capital calls are simulated as index share purchases and distributions as index share sales. Contributions are scaled by a factor such that the ending portfolio balance is equal to the private equity net asset value (equal ending exposures for both portfolios). This seeks to prevent shorting of the public market equivalent portfolio. Distributions are not scaled by this factor. The IRR is calculated based off of these adjusted cash flows.??