The demand for additional global infrastructure investment reflects a growing pattern, primarily determined by demographic and economic drivers as well as political trends. According to economic forecasts by Global Insight, S&P calculates a total gap between investment needs and available public funds of USD8.4 trillion by 2030, corresponding to an annual gap of USD500 billion in global infrastructure requirements, which private investors have an opportunity to plug.

Global infrastructure spending is expected to receive a boost by the recent G20 leaders’ initiative to establish a global infrastructure hub with a four-year mandate and the World Bank Group’s global infrastructure facility, which is expected to complement the G20’s infrastructure initiative.
A strategic portfolio exposure to the STOXX Global Broad Infrastructure TR Index would have rewarded long-term investors. The STOXX Global Broad Infrastructure TR Index performed better than a number of market indices in return/risk terms by limiting drawdowns and posting considerably less volatility in annualized terms.
The inclusion of the STOXX Global Broad Infrastructure Index in a mean-variance optimized portfolio of diversified assets shows an enhancement of the return/risk profile along the efficient frontier, for both the constrained and unconstrained versions.

With a longer-term time horizon, taking into account expected investor allocations, the outlook for infrastructure is very positive. The results of the Preqin Investor Interviews—December 2014 show that a significant 40% of the surveyed investors plan to increase their allocation to infrastructure in 2015 compared to the current level.

Read: Strategy Insight Report