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

UBS has identified four key reasons why infrastructure investments may be a prudent consideration for investors currently. Firstly, the asset class is expected to benefit from structural spending trends driven by factors such as population growth, AI advancements, supply-chain realignment, energy security, and the transition toward net-zero emissions, potentially resulting in over $100 trillion in cumulative investment by 2040.

Secondly, many infrastructure assets generate stable and inflation-linked cash flows, which could provide a buffer against potential economic slowdowns and persistent inflation resulting from geopolitical tensions, US political uncertainty, or setbacks in AI investment. Thirdly, infrastructure-linked assets have demonstrated solid historical returns, with a 10.9% return in 2025 and an average annual return of 10.8% during the previous decade.

Lastly, infrastructure investments can offer portfolio diversification, with its correlation to a traditional portfolio of stocks and bonds declining to around 30% in recent years, and its low correlation with gold making it a complementary allocation. UBS currently recommends core and core-plus infrastructure investments in non-cyclical sectors, such as utilities, toll roads, pipelines, and social infrastructure, which can provide more predictable, inflation-protected income compared to development-stage projects.

However, investors should be aware of potential risks, including illiquidity, leverage, defaults, political intervention, regulatory changes, and sector or regional concentration.

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