Introduction: The Case for Real Assets in a Repricing World

In the current investment environment, where rates remain elevated, growth forecasts are patchy, and risk sentiment oscillates week-to-week, there’s a growing argument for looking past the noise. At Tamim, we’ve long been proponents of thematics grounded in long-duration cash flows and macro resilience. Infrastructure, particularly listed infrastructure, continues to earn its place as a vital, underappreciated pillar in that framework.

Why infrastructure, and why now? Because amid global uncertainty, few asset classes offer the same blend of defensiveness, inflation linkage, and long-term structural growth. As allocations to risk assets get reassessed in real time, infrastructure stands out not just as a ballast, but as a ballast with a growth driver.

This note, the first of a two-part series, outlines why listed infrastructure should command more attention in investor portfolios, especially in Australia where it’s structurally under-allocated. Our focus is not just on the appeal of stable cash flows, but on how these assets align with key megatrends shaping the global economy in the years ahead.

A Real Asset in an Unreal Environment

Infrastructure sits at the intersection of economics and physicality. Unlike digital-first business models or intangible-heavy growth stories, these are physical assets providing essential services: power, water, transport, communications. They are not easily disrupted. They are not easily replaced. In many cases, they are irreplaceable.

This tangibility matters in a world where asset prices are often untethered from fundamentals. While equity markets recalibrate to higher rates and political shifts, infrastructure offers something deeply reassuring: cash flows backed by regulation, concession agreements, or long-term contracts.

More than anything, listed infrastructure offers a rare combination in public markets, specifically predictable revenue with structural tailwinds.

Inflation-Linked Resilience

In theory, many equities are supposed to offer a hedge against inflation. In practice, few do particularly over shorter cycles. Infrastructure, however, often embeds inflation directly into its revenue models.

Whether through regulated utility returns, contracted CPI-linked escalators, or usage-based fees that track nominal GDP, infrastructure earnings tend to rise with inflation, not after the fact, but concurrently. This provides a real hedge, not just a theoretical one.

The relevance of this feature has only increased in recent years. As monetary authorities globally battle stickier inflation across labour and services, real assets with embedded inflation linkage are increasingly valuable, not just for capital preservation, but for income growth.

A Strategic Role in Portfolio Construction

We often speak of infrastructure as offering a “third way”, somewhere between bonds and equities. It carries equity-like growth with bond-like cash flow characteristics. This makes it particularly attractive during periods of uncertainty.

For long-term investors, infrastructure performs several roles:

1. Diversification: Infrastructure’s correlation to broader equities is relatively low, particularly during drawdowns.
2. Income stability: Cash yields from mature infrastructure assets can be consistent and above-market, with lower payout volatility.
3. Defensive growth: The asset class participates in upside when growth surprises to the upside (e.g., increased utilisation) while protecting the downside via essential service provision.

It is this duality, resilience and relevance, that makes infrastructure such a core holding for institutions globally, and increasingly, for retail portfolios seeking to hedge volatility with something productive.

Thematic Alignment: From Transition to Digitisation

Perhaps the most compelling reason to revisit infrastructure in 2025 is how well it maps to the defining macro themes of the coming decade.

1. Energy Transition

From grid modernisation to renewables, infrastructure is the literal and figurative backbone of the decarbonisation effort. Massive capital deployment is required, not in apps or marketplaces, but in transformers, substations, interconnectors, and storage.

Governments globally are leaning into this transition with policy and capital support. Infrastructure sits at the nexus of these policy-driven buildouts.

2. Demographic and Urban Growth

Ageing populations and urbanisation are not new trends, but their implications are compounding. The demand for transport networks, aged care facilities, and water security infrastructure continues to grow, not just in the developed world, but in high-growth markets across Asia and Latin America.

3. Digital Infrastructure

The digital economy still relies on physical infrastructure. Fibre, mobile towers, edge computing, and hyperscale data centres are the new pipes and roads. This “soft” infrastructure shares many of the cash flow characteristics of its hard infrastructure peers, and its capital intensity and longevity make it functionally identical from an investment standpoint.

In each of these areas, listed markets offer partial but meaningful exposure to the transition underway.

Repricing and the Opportunity in Listed Markets

Despite the strength of the underlying cash flows, listed infrastructure names have not been immune to market-wide volatility. As rates rose, discount rates increased. Valuations compressed. Sentiment swung.

But beneath the surface, the fundamentals remain largely intact. In fact, many listed infrastructure businesses have continued to grow earnings per share, pay dividends, and reinvest in their asset bases. What we’re seeing is a disconnect between price and value, a situation that doesn’t last forever.

This divergence creates opportunity.

Listed infrastructure is now trading at attractive multiples relative to history and private market equivalents. Investors with a long horizon and a focus on fundamentals have an entry point that may not last as macro clarity returns.

Liquidity vs Illiquidity: Don’t Confuse Smoothness with Safety

One critique often made of listed infrastructure is its exposure to market sentiment. Prices can move independently of fundamentals. This is true.

It’s also true of all listed assets, and often, the “smooth” returns of private infrastructure funds mask significant embedded risk. Illiquidity doesn’t eliminate volatility. It just hides it.

In contrast, listed infrastructure provides:

• Real-time pricing
• Transparent governance
• Flexibility to rebalance or exit

For investors seeking both liquidity and infrastructure-like outcomes, it remains a highly viable path.

The Australian Dilemma: Scarcity of Local Names

The domestic listed infrastructure pool in Australia is increasingly narrow. Takeovers and privatisations have removed key names from the ASX. This scarcity only reinforces the need to look globally or to seek infrastructure traits in adjacent sectors.

That doesn’t mean there’s no opportunity here. It does mean however, that investors need to be creative, thematic, and willing to build a mosaic exposure rather than rely on a single name or ETF.

The second part of this series will examine how to do this effectively, combining local names, global strategies, and thematic adjacencies to create a robust infrastructure allocation.

TAMIM Takeaway: Quiet Strength, Real Utility

Infrastructure doesn’t promise exponential upside. It doesn’t pivot or disrupt or dazzle. But that’s precisely its appeal.

In 2025, with capital markets recalibrating and many investors re-evaluating their portfolios, real assets with real cash flows and real economic relevance are having a moment.

Infrastructure offers:

• Stability in earnings and dividends
• Hedge against inflation and policy volatility
• Alignment with long-term macro trends

Actionable insights for investors:

• Reassess your portfolio’s exposure to long-duration, real assets.
• Consider global listed infrastructure as a way to enhance income and reduce beta.
• Use market volatility to build positions in attractively priced infrastructure-linked strategies.
• Focus on thematics, energy transition and digital transformation, where infrastructure is essential.

As we often say at Tamim, investing isn’t just about chasing growth, it’s about ensuring the foundations are sound. Infrastructure, now more than ever, deserves to be one of those foundations.