Unlisted Infrastructure Investing

Unlock opportunities with our unlisted infrastructure investments

What is unlisted infrastructure investing?

Infrastructure is the backbone of our society. It provides the essential services that we rely on every day, such as transportation, connectivity, energy, water, and sanitation. Infrastructure also plays a vital role in economic growth and development.

However, unlisted infrastructure remains underutilized as a diversifier. Traditional asset classes like equities and fixed income play crucial roles but are more susceptible to broader market volatilities and may be supplemented to meet the long-term return objectives of investors.

The global infrastructure landscape is diverse, encompassing transportation, utilities, and social infrastructure. Unlisted infrastructure within the broader infrastructure sector has a valuation surpassing $10 trillion and is expected to experience substantial growth. Key drivers include the need for enhanced energy efficiency, rising data demands, challenges in digital communications from changing work and lifestyle dynamics, and evolving demographics.

The potential benefits of investing in unlisted infrastructure:

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Diversification

As a real asset category, infrastructure offers a distinct risk, return and diversification profile relative to other asset classes, and thus merits consideration for a discrete allocation in a diversified portfolio.

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Income generation

Infrastructure investments typically feature steady cash flows derived from tangible, long-life assets with monopoly-like pricing power; many are regulated and may feature income linked directly to inflation.

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Long-term return potential

Secular growth trends in renewables, digital and social. Business models that are effective at harvesting these long-term trends are difficult to access in the listed market.

RISK MANAGEMENT

Managing risk across vintages and profiles

Creating an unlisted infrastructure portfolio requires investors to maintain the designated exposure in capital and strategic allocations. Closed-end funds, commonly used for this purpose, present challenges due to their fixed legal duration. Navigating commitments, predicting capital calls and distributions is complex, especially with unpredictable business scenarios and blind pool commitments. Closed-end funds' continuous asset changes disrupt portfolio diversification metrics, necessitating ongoing oversight. Conversely, an open-end fund structure provides a streamlined and less complex approach, alleviating these challenges.

Risk management: Exposure of single funds over multiple vintages compared to well-managed portfolio of open-end funds

Why Russell Investments for unlisted infrastructure?

OPEN ARCHITECTURE

We use thorough research and expertise to build portfolios, seeking distinct sources of return, creating value, and aiming to minimize downside risk. We collaborate with managers specializing in differentiated strategies.

Breadth and Depth of Access

Our extensive manager research, scale, infrastructure, and industry experience helps enable Russell Investments to secure favorable capacity terms well in advance for our clients.

Our Experience

For 50+ years, Russell Investments has adeptly integrated private markets into institutional portfolios. Our robust governance culture, consulting legacy, and fiduciary mindset helps ensure tailored solutions aligning with client returns, risk preferences, and regulatory obligations.

Types of unlisted infrastructure assets

There are different types of infrastructure assets and their relative position with respect to expected risk and expected return:

Our unlisted infrastructure solutions

Webinar recording

Investing in private infrastructure: A look at insights, trends and expert perspectives

A webinar hosted by Pensions & Investments

Held: November 15, 2023

In this webinar, Michael Steingold, Director, Private Markets for Russell Investments and Will Smales, Global Chief Investment Officer of infrastructure specialist Morrison & Co. delve into the fascinating world of infrastructure investing. They provide a comprehensive introduction to infrastructure as an asset class and explore its potential as a valuable addition to a multi-asset portfolio, helping you achieve diversification and stability against the backdrop of a high-inflationary environment.

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Lisa Schneider

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Lisa Schneider, CFA

Managing Director,
Head of Client Solutions

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