Building for growth: Unlocking the power of infrastructure assets

The modernization of our infrastructure is essential to fostering a growing and equitable economy. Institutions are tuning into what we believe is a generational opportunity, not only for the potential portfolio benefits listed below, but as a powerful way to invest in the trends that will shape the future of our economy.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Portfolio positioning

Unlocking the power of infrastructure assets

In a market regime of higher macro and market volatility, infrastructure assets are poised to offer stable returns, inflation protection, diversification benefits and an opportunity to drive the energy transition forward.
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Resilient returns over time

Potential to deliver stable income and a return premium over fixed income and equities across different market cycles for the long-term.
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Inflation protection

Explicit and implicit linkages to inflation strengthen portfolio performance during high inflation environments.
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Diversification benefits

Offers diversification in periods of market volatility due to its idiosyncratic risk characteristics and low correlation to other asset classes.
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The energy transition

The transition to a low-carbon economy is driving a surge in infrastructure investment.

Infrastructure as a potential inflation hedge

Living with inflation

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The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results.
Source: Bloomberg, Barclays. EDHEC for Infrastructure equity; NCREIF for Global Real Estate; MSCI for Global Equities; and BBG Barclays Global Aggregate Index TR for Global fixed income, as of May 22, 2023 (annual data since 2001). The charts are based on an illustrative US economic scenario. Past performance is not indicative of future results. You cannot invest directly in an unmanaged index. High growth periods are when U.S. GDP > 2.5% and Low growth periods are when U.S. GDP < 2.5%. High inflation periods are when U.S. CPI > 2.5%.

Staying ahead of inflation with infrastructure assets

Infrastructure is a unique asset class with characteristics that can provide resilience in the current rising rate and high inflationary macroeconomic environment.

Historical infrastructure outperforms during high inflationary times

The returns of private infrastructure companies tracked in the EDHEC 300 index increased by 23% through low growth and high inflation scenarios.

Explicit linkages to inflation

Infrastructure assets have long-term revenues that are often contracted or regulated in nature, with examples including power purchase agreements (“PPAs”) or take-or-pay contracts.

Building more resilient portfolios

A dedicated infrastructure position, held as part of a broadly diversified long-term portfolio, has the potential to increase both the efficiency and durability of the portfolio’s returns.

Risk/Return relationship chart

BlackRock, May 22, 2023, based on BlackRock's Capital Market Assumptions. Expected Returns are net of fees and expenses and calculated using a model fee equal to 0.30%, which represents the highest advisory fees charged for an institutional client. Expected returns also reflect reinvestment of dividends, capital gains, and interest but do not reflect the deduction of taxes. Had that expense been deducted, performance would have been lower. There is no guarantee that the capital market assumptions will be achieved, and actual risk and returns could be significantly higher or lower than shown. Hypothetical portfolios and risks shown are for illustrative discussion purposes only and no representation is being made that any account, product or strategy will or is likely to achieve results similar to those shown. Expected risk is calculated using the expected volatility assumptions. Expected risk is defined as annual expected volatility and is calculated using data derived from portfolio asset class mappings, using the Aladdin portfolio risk model. This proprietary multi-factor model can be applied across multiple asset classes to analyze the impact of different characteristics of securities on their behaviors in the marketplace. In analyzing risk factors, the Aladdin portfolio risk model attempts to capture and monitor these attributes that can influence the risk/return behavior of a particular security/asset. See "Capital Market and Modeling Assumptions". Past performance is not a guarantee or reliable indicator of future results.

Equity and fixed income relationship

The Great Moderation saw long-term bonds work as a cushion against risk asset selloffs. We think this era is over and strategic infrastructure allocations can help make portfolios more resilient.

Low correlation to other asset classes

Infrastructure equity exhibits low correlation to traditional asset classes due to its idiosyncratic characteristics.

Diversification benefits

Our research finds that adding infrastructure to a traditional 60/40 portfolio, could increase returns while diversifying risk. The optimal portfolio allocation has a 35% exposure to infrastructure.

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Infrastructure investments impact on the world

Infrastructure investments offer institutions the opportunity to invest in the building blocks of our economy and support the transition to a more technology-driven world. We believe BlackRock’s global reach, experience and sourcing prowess provide the foundations of an investment platform investors can build on with confidence.
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