Should plan sponsors manage the complex and wide-ranging mix of infrastructure assets from a single allocation, or would these investments be better managed in multiple allocations? Furthermore, are infrastructure assets best managed from a private equity allocation? A real estate allocation? A hybrid “inflation-linked” asset class or even a separate infrastructure allocation? The answers to these questions are as varied as the universe of plan sponsors itself. No one-size-fits-all allocation exists, and plan sponsors will determine what’s best for them based on their investment objectives and the resources at their disposal.
Categories and labels matter in the institutional investment world. It took most of the 1990s for institutional investors to settle on where REITs fit into a broader investment portfolio. Now investors are struggling through the same classification process with an even tougher to label investment theme — infrastructure.