DISCUSSION PAPER PI-1103
Infrastructure as an Asset Class
Infrastructure as a new asset class is said to have several distinct and
attractive investment characteristics. This article reviews concepts, market
developments and empirical evidence on the risk-return and cash flow profile,
and the potential for diversification and inflation protection in investor
portfolios. Furthermore, a new, global analysis of the historical performance
of infrastructure funds is undertaken. There is no proper financial theory
to back the proposition of infrastructure as a separate asset class. Infrastructure
assets are very heterogeneous, and empirical evidence suggests an alternative
proposition that treats infrastructure simply as a sub-asset class, or particular
sectors, within the conventional financing vehicle on which it comes (e.g.
listed and private equity, bonds).