Many investors have grown more comfortable with the risk/return attributes of newly constructed infrastructure; other investors, not so much. Operating brownfield investments will always be the core of infrastructure portfolios. But many infrastructure managers are frustrated by some basic misunderstanding — and mispricing — of certain greenfield risk.
This is not an academic question. Exposure to greenfield assets with core infrastructure characteristics offers attractive premiums at the moment, with manageable additional risk to brownfield investments. Investors may be missing opportunities.
Even if the goal of an infrastructure allocation is decidedly conservative and yield-driven, there eventually will be greenfield investments along the way. Most would agree there should be some exposure. Such exposure provides diversification and additional return. And many funds that focus on brownfield investments still include greenfield projects.