Brookfield's Investment Solutions Group has published a new analysis, The Evolution of Infrastructure Investing1, and the framing is blunt. Authored by Alper Dagliogu, Riley O'Neal, Gaal Surugeon and Sam Garetano, the report argues that the question is no longer whether to allocate to the asset class, but how to build a portfolio that actually captures where infrastructure has gone. That distinction, between allocating and architecting, is the spine of the piece.
Resilience, Tested and Confirmed
The team opens with the stress test infrastructure has already passed. Across a pandemic, a rate shock and renewed geopolitical conflict, infrastructure has demonstrated more resilience than most investors expected. The numbers back it up: private infrastructure averaged a 1.6% quarterly return in quarters when equities were negative, ahead of private real estate, private equity and well clear of global equities' -6.7%. In above-average inflation quarters, infrastructure returned 3.4%, trailing only private equity. Private infrastructure's correlation to private real estate, by contrast, sat at a comparatively higher 75.2%.
Three Trends Rebuilding the Backbone
The opportunity set has not changed because the definition of infrastructure has changed. It has changed because digitalization, decarbonization and deglobalization are reshaping the global economy itself. Each trend has layered on top of its prior phase rather than replacing it: towers and fiber gave way to data centers and cloud, which have now evolved into AI compute and the power infrastructure to support it. Hydroelectric and wind expanded into solar and distributed generation, and now into batteries and transmission. Ports and logistics gave way to LNG and pipelines, now extending into container leasing and semiconductor manufacturing. Global infrastructure assets under management have tracked that expansion, from $135 billion in 2008 to $1.0 trillion in 2020, $1.7 trillion in 2025, and a forecast $2.9 trillion by 2030. The investment needed globally through 2040 runs to roughly $100 trillion, a figure the team sources to McKinsey.
A Widening Allocation Gap
Despite that growth, 46% of institutional investors are currently underallocated to infrastructure, according to Infrastructure Investor's LP Perspectives 2026 Study. Part of the problem is structural: institutional capital remains skewed toward core and core-plus strategies even as the asset class under management by strategy has broadened materially since 2010, with debt and value-add/opportunistic sleeves growing their share of a market that has roughly quadrupled.
The Capital Structure Is No Longer Binary
A notable divergence from how infrastructure portfolios were historically built: demand is growing for debt and structured equity alongside equity strategies. Infrastructure debt has historically offered higher yields than corporate bonds and Treasuries, with historically lower default rates and higher recovery rates than broad corporate loans, while remaining senior and more downside protected. Structured equity, sitting between the two on a spectrum from convertible debt to non-control common equity, blends contractual income with upside participation and can be designed to solve ownership or liquidity problems directly.
Five Questions, Then Three Portfolios
The team frames the construction problem as five interlocking questions: sizing and funding the allocation, selecting the right return drivers (cash yield, earnings growth, or multiple expansion and development), isolating factor versus idiosyncratic risk, choosing the vehicle for liquidity and pacing needs, and benchmarking performance where no universal standard exists. It then operationalizes the framework into three illustrative portfolios. An income-oriented mix (70% core and stabilized renewables, 30% debt) targets a 9.0% net IRR and 5.2% distribution yield. A diversified portfolio spreads across six strategies for a 10.5% target net IRR. A growth-oriented portfolio, anchored in value-add energy and thematic strategies, targets 13.0% with a 0% distribution yield, reflecting its longer, closed-end hold.
Bottom Line
The report's underlying message is that infrastructure's traditional defensive case, stable income, inflation protection, diversification, still holds, but the toolkit for capturing it has outgrown most existing allocations.
Five Key Takeaways for Advisors and Investors
- Stop benchmarking the decision to "whether." The live question for clients is portfolio construction, not initial allocation; a static core-only sleeve is likely under-capturing the opportunity set.
- Revisit the funding source. Income-oriented allocations are best funded from fixed income or credit; growth-oriented allocations are better funded from public or private equity, since each choice changes the portfolio's risk, liquidity and cash-flow profile.
- Separate factor risk from idiosyncratic risk. A strategy label alone can mask concentration; co-investments and direct deals carry materially more asset-specific risk than fund structures.
- Treat debt and structured equity as diversifiers, not afterthoughts. Both can improve downside protection and add return sources distinct from equity-only exposure.
- Blend benchmarks rather than picking one. CPI-plus, public-market indices and aggregated private data each answer a different question; relying on a single measure risks mischaracterizing how the allocation is actually performing.
Footnote:
1 Dagliogu, Alper, et al. The Evolution of Infrastructure Investing: How an Expanding Opportunity Set Is Changing the Way Institutional Investors Allocate to Infrastructure. Brookfield, Oct. 2026, www.brookfield.com/sites/default/files/documents/The%20evolution%20of%20infrastructure%20investing.pdf.
