Charles Hamieh (pictured), managing director and portfolio manager at , a subsidiary of Franklin Templeton, told WealthBriefing this week why the firm is upbeat about the area. “The macroeconomic backdrop is stable but it is still quite uncertain. Investors are dealing with interest rate changes, inflation and geopolitics,” he said. “Parts of the equity market are quite fragile, especially around artificial intelligence (AI). With listed infrastructure, there is strong growth and disciplined valuations. That’s the economic environment we are operating in.”

“The outlook for listed infrastructure is very positive,” Hamieh said. 

“The biggest change in the last five to eight years is growth in global electricity demand  driven by datacentres, AI, and accelerating industrial activity,” he continued. “After a long period of flat or negative electricity demand growth, especially in Europe, electrification, industrialisation, reshoring, data centres are all contributing to the need for more power. The opportunity is quite broad. It requires regeneration, fuel supply, transmission, and storage capacity.

“Our strategies are delivering 10 per cent annualised returns. A lot of our companies are fast growing and immune to rates and inflation. It’s hard not to be overly positive. Listed infrastructure, which is typically more defensive, offers investors inflation protection.

“When it comes to energy, we avoid firms that have commodity price exposure. We invest in firms that provide an asset and make that asset available and earn their return in a regulated framework, for instance,” he said.

Hamieh highlighted grid transmission companies such as the UK's National Grid as well as companies that own airports and toll roads. “We do best in mid-stream companies that own the transmission and distribution pipes that move the gas around. There has been a strong structural re-rating, especially around natural gas infrastructure,” he continued.

Figures appear to support a positive trend. According to some estimates, from PwC for example, annual global infrastructure spending will rise rom $4.4 trillion in 2024 to $6.9 trillion by 2050, producing a cumulative investment over that period reaching $151.1 trillion. In a 30 March report from CBRE Investment Management, it said that the infrastructure asset class delivers performance in the 10 per cent to 13 per cent range, gross of fees.

Funds want a piece of the action. In 2024, for example, BlackRock, the world’s largest asset manager, acquired all of Global Infrastructure Partners (GIP). In December 2023, Middle East alternative investment firm Investcorp bought a 50 per cent stake in the $4.8 billion infrastructure business of US firm Corsair Capital. For years, Australia's Macquarie has been a big player in the space. In July 2024, Vontobel, the Switzerland-based wealth and investment manager, completed its purchase of a “significant minority stake” in Ancala Partners, an infrastructure investment business based in London. Amundi bought Alpha Associates in 2024; other 2024 deals included Bridgepoint Group's purchase of Energy Capital Partners; Commerzbank's Acquila Capital purchase; General Electric's acquisition of Actis, and EnTrust's purchase of OMP Capital.

However, there are risks in infrastructure, for example when governments change the bidding process for contracts, or if investment returns disappoint and there are arguments about service delivery.

Last year, issued an annual study of the asset class.

Renewables
ClearBridge's Hamieh said that renewables "remain an important part of the energy mix.” “We have seen an increase in capacity across renewables. Renewables mid stream are really capturing the data centres' load. We have seen surging demand in the US and globally. We are still very positive about renewables and we are increasing our exposure selectively to high quality companies.”

Along with other investment managers, he highlighted how the conflict between Ukraine and Russia accelerated the drive towards renewables and energy independence which has also been exacerbated by the US-Iran conflict.

After New York suspended the construction of major data centres, blaming their high consumption of energy and water, in line with a number of investment managers, Hamieh thinks that more such restrictions could happen in North America. “There has to be a stepping back and a proper analysis of the data centres,” he said. “There are a lot of economic benefits in the regions where data centres are growing like Texas, Louisiana, Pennsylvania, Georgia but it needs to be managed.”

“We have seen issues about affordability in terms of higher electricity prices in some areas and water issue concerns. We have to be mindful of those risks. It could slow down planning but it won’t change the outlook over the medium term. Data centres will still be built. I don’t think there will be a significant risk in the medium to long-term,” Hamieh said.

A data centre 

ClearBridge Global Infrastructure Income Fund
Hamieh, portfolio manager of the ClearBridge Global Infrastructure Income Fund, mainly invests in the US and Europe. “The sweet spot for us is utilities, namely water, gas, electricity, renewables, as well as airports, railroads and mid stream companies,” he said.  

“We invest in Engie, for instance, a European listed utility, and the largest addition to our portfolio last year. Our largest holding is Entergy, a US utility that operates around Louisiana near data centres,” he continued. “We have also increased our exposure to the Spanish airport Aena. It is right in the sweet spot. In the US, we like rail companies and invest in Canadian National Railway Company. Rail has irreplaceable networks where returns come from pricing and productivity. We have seen accelerating cash flow growth.”

The ClearBridge Global Infrastructure Income Fund gives UK investors access to infrastructure assets through a diversified portfolio of global listed companies. By focusing on businesses that generate stable, inflation-linked revenues and benefit from long-term structural demand, the strategy aims to deliver resilient income and portfolio diversification supported across all market environments.

Top countries include the US, Canada, France and Italy while sectors include electric, energy infrastructure, gas, airports, renewables, rail, water and toll roads. Top holdings include Entergy, Engie, Aena and Canadian National Railway Company.

“It is hard not to be silent about this asset class. We are riding the sweet spot. It is not just a defensive asset class. It should increasingly be viewed as a core part of a diversified portfolio,” Hamieh concluded.

See more about listed infrastructure here.