The performance of unlisted infrastructure in investment portfolios

Abstract

Unlisted infrastructure funds have taken on increased importance in recent years with institutional investors, as well as unlisted infrastructure becoming a key asset class for pension funds and sovereign wealth funds. This paper assesses the significance and performance of unlisted infrastructure in Australia over Q3:1995–Q2:2009 by utilising a unique unlisted infrastructure performance series. Unlisted infrastructure is seen to be a strongly performed asset class on a risk‐adjusted basis, as well as providing significant portfolio diversification benefits and displaying different investment characteristics to listed infrastructure. Unlisted infrastructure performance was seen to be robust during the global financial crisis (GFC) for both risk‐adjusted performance and portfolio diversification benefits; particularly in comparison with listed infrastructure and the other listed assets. Issues regarding the future strategic development of unlisted infrastructure as an effective asset class are also identified.