UBS lists 4 reasons why it may be a good time to look at infrastructure now

Investment firm UBS has outlined four reasons why now could be a favorable time to consider investing in infrastructure. Firstly, the sector is expected to benefit from ongoing structural spending trends. Factors such as population growth, advancements in artificial intelligence, changes in supply chains, energy security concerns, and the effort to achieve net-zero emissions could result in over $100 trillion in total investments by 2040, according to McKinsey's estimates referenced by UBS.

Secondly, many infrastructure assets generate steady, inflation-linked cash flows. This could prove advantageous during periods of economic uncertainty, including geopolitical tensions, political instability in the United States, or setbacks in AI investments, which might lead to slower growth and persistent inflation.

Thirdly, the asset class has demonstrated solid historical returns. Infrastructure-linked assets delivered a return of 10.9% in 2025 and averaged 10.8% annually over the preceding decade, as per Cambridge Associates data included in the report. However, it's important to note that past performance does not guarantee future results.

Lastly, investing in infrastructure can offer portfolio diversification. Its correlation with a traditional portfolio consisting of 60% stocks and 40% bonds has decreased to around 30% in recent years. Additionally, infrastructure's low correlation with gold makes it a potentially complementary investment allocation. UBS currently recommends core and core-plus infrastructure investments in non-cyclical sectors, such as utilities, toll roads, pipelines, and social infrastructure. These strategies typically focus on established assets with fixed or regulated revenues.

It's worth mentioning that while UBS identifies these potential benefits, investors should also be aware of the risks associated with infrastructure investments. These risks include illiquidity, leverage, defaults, political intervention, regulatory changes, and concentration in specific sectors or regions. Depending on their liquidity needs and risk tolerance, investors can gain exposure to infrastructure through direct investments, infrastructure funds, public-private partnerships, or listed securities.