Is this a favorable moment to make infrastructure investments?

In addition to providing steady income, wise infrastructure investments can take advantage of multiple convergent tailwinds

In times when the emphasis is on dazzling, fast-growing tech stocks, infrastructure stocks may take a backseat.

However, there are a number of benefits to investing in infrastructure, and this might be a great time for investors to think about increasing their exposure. While governments in the UK and other countries are increasing their infrastructure spending, the artificial intelligence (AI) boom is providing the sector with substantial tailwinds.

Although they rarely appear on lists of the best stocks, funds, and trusts, infrastructure investments can be beneficial to portfolios.

Infrastructure provides "a source of growing income, a source of inflation protection, and a way to access particular themes where large amounts of investment are being capitalised," according to Mark Brennan, the Guinness Global Real Assets Fund's portfolio manager.

Numerous infrastructure funds prioritize long-term sustainable objectives, like renewable energy, and profit from government initiatives to achieve these goals.

In contrast to high-tech growth stocks, which are risky and extremely vulnerable to changes in the macroeconomic environment, infrastructure stocks can provide some degree of inflation protection and defensive characteristics.

One of the macro tailwinds for infrastructure investments is the push for increased infrastructure spending in Europe and the UK.

In January, the UK's ministers announced plans to spend 725 billion on infrastructure over the next ten years, while earlier this year, the German parliament unlocked a 500 billion infrastructure fund.

What benefits come with purchasing stocks in infrastructure?

Even though the different infrastructure subsectors vary, infrastructure stocks generally have some characteristics that investors find appealing.

The director of research and analytics at the London Stock Exchange Group, Sergiy Lesyk, writes, "Investors often view infrastructure as a diversifying asset from other asset classes." By providing exposure to steady returns and a consistent income, it has been known to act as a hedge against long-term obligations.

Due to their lengthy contracts, infrastructure companies typically produce consistent, predictable revenue streams.

Additionally, they generally withstand inflation well. Contracts with regulated infrastructure companies, such as utilities, for instance, frequently include recurring price increases that are tied to inflation.

In order to try to keep up with inflationary pressures, Brennan says, "it would be typical to see some kind of annual escalator in unregulated business models, such as a semi-annual or five-yearly contractual escalator built into the lease structure."

Why is this a favorable moment to make infrastructure investments?

The equity markets have experienced significant volatility in 2025, and infrastructure investments typically do better during market declines like the tariff turbulence in April.

"We've been emerging from a slight bear market over the past couple of years, which was mostly caused by interest rates," Brennan says. Because they are frequently financed by debt, infrastructure stocks may be susceptible to changes in interest rates.

Nevertheless, Brennan claims that 2025 is "marking a little bit of a turning point for the sector broadly" because interest rates are declining globally despite sticky inflation in some regions.

Thematic developments, especially the growth in AI, are also contributing to unusual levels of earnings growth in certain infrastructure industries.

Brennan says that "especially for companies that are exposed to growth in energy demand, particularly electricity, and particularly driven by data centers in more developed markets."

Enbridge (NYSE:ENB) is one such. Enbridge, whose renewable energy business is expanding, announced in July that it is constructing a 600 megawatt solar facility in Texas. Meta (NASDAQ:META) will use all of the energy produced to power its data center and technology operations.

One of the more affordable plays on the AI theme may be infrastructure plays like these.

How to make infrastructure investments.

Most investors find that investing in infrastructure presents a challenge because "by their nature, these are very illiquid assets," according to Ben Seager-Scott, chief investment officer at Forvis Mazars. Since selling a port or a pipe network is a costly and time-consuming process, real infrastructure investment is best carried out strategically.

Infrastructure investment trusts are therefore one of the most widely used ways for individual investors to get into the market. Seager-Scott warns that "they are still subject to the usual volatility of listed instruments and the underlying investments remain highly illiquid," but he claims that these "are closed pools of capital that trade on the stock exchange so can provide an apparent level of limited liquidity on a daily basis."

Data from the Association of Investment Companies (AIC) shows that infrastructure investment trusts currently yield more than 6.1 percent and trade at an average discount of 16.7 percent. In contrast, the average yield and discount for renewable energy infrastructure trusts are 9 and 27 percent, respectively.

"Since sentiment hasn't caught up, boards are now looking to manually close the gap by selling assets, reducing debt, and initiating share buybacks to unlock shareholder value," says Darius McDermott, managing director at Chelsea Financial Services. "Underlying asset values remain solid."

Infrastructure funds like Brennans Guinness Global Real Assets are also available. Launched in July, the fund seeks to capture the characteristics of infrastructure investments through 35 equal-weighted stocks that span the spectrum of infrastructure investments, including businesses that stand to gain from higher data center spending (such as Enbridge).

About 35% of Guinness Global Real Assets' portfolio is allocated to infrastructure-focused investment trusts.