Nearly two-thirds (63 per cent) of institutional investors, including pension funds, plan to increase allocations to infrastructure equity over the next three to five years, according to research from IFM Investors.

The annual survey of 700 senior investment professionals across 19 countries found that infrastructure is increasingly viewed as a way to combine resilient portfolio characteristics with long-term structural growth.

At the same time, 55 per cent of respondents ranked inflation among their top three investment risks.

The PM700 research, now in its third year, found that private markets remain a key area of growth, with 53 per cent of investors citing diversification as a primary reason for increasing exposure.

Respondents reported that more than a third of assets under management are already invested in private asset classes.

The research also highlighted growing interest in long-term investment themes.

Some 61 per cent of respondents said private markets are better than public markets for accessing megatrend opportunities, while 71 per cent said exposure to trends such as artificial intelligence (AI), the energy transition and demographic change will be essential to achieving future return objectives.

However, concerns remain around portfolio resilience.

While 47 per cent said macroeconomic factors would have the greatest impact on their private market investments, only 21 per cent believed their portfolios were designed to perform consistently across different economic conditions.

IFM Investors said private market investment activity remains focused on developed markets, particularly North America and Western Europe.

Responding to this year’s findings, IFM Investors chief strategy officer, Luba Nikulina, said: “Investors around the world are facing the balancing act of portfolios that can remain resilient through inflation, geopolitical uncertainty and rapid structural change while also continuing to deliver the returns their stakeholders require.

“What PM700 shows is that investors are no longer accepting the trade-off between resilience and growth and are increasingly expecting their portfolio to deliver both – one of the main reasons behind infrastructure continuing to be a favourite investment target globally.

“We’re also seeing an alignment between the world’s largest investment themes and infrastructure themes. Artificial intelligence requires data centres, data centres require power, electricity networks and fibre connectivity while energy security requires large-scale investment in generation, transmission and essential infrastructure.”

Nikulina added that while private markets continue to offer opportunities, investors are becoming more selective about how to access them.

---