Asset classes: Infrastructure

15 Nov 2022 3 min read

An asset class, as explained in our introduction to asset classes, is simply a group of assets that share similar characteristics.

While shares are intangible, ‘real assets’, which includes commodities, real estate and infrastructure, have actual physical assets underlying them — gold, buildings, bridges and toll roads, for example.

Although there is no single accepted definition of infrastructure, it is usually understood to refer to facilities and services that are fundamental to a well-functioning economy and society, such as transport, communications, power, water and health infrastructure (like hospitals).

Infrastructure has emerged as a separate asset class relatively recently. In the past, it was usually governments that funded the building and maintenance of infrastructure assets, but as the gap between infrastructure requirements and available government funds has grown, private investment is increasingly relied on. In developing countries, investment can allow necessary infrastructure to be built, while in developed countries there is increasing demand for technologically advanced and environmentally sustainable infrastructure to replace outdated existing assets.

Infrastructure investing is done via either listed infrastructure investments, which are traded on the share market and are considered “shares”, or unlisted (direct) infrastructure investments, which are usually managed by specialist investment managers.

Super investment in infrastructure

Investment by super funds in infrastructure makes a vital contribution to Australia. According to the Association of Superannuation Funds of Australia, at the end of the June 2022 quarter super assets in Australia totalled $3.3 trillion, of which 16% was invested in property and infrastructure.

The NGS Infrastructure investment option mainly invests in global infrastructure assets through public exchanges, which provides our members exposure to a wide range of asset types across different regions and allows our members to adjust their allocation quickly.

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