NEPC’s Matthew Ritter was quoted in a recent Pensions & Investments article to discuss the rise in infrastructure allocations and the expansion of targets based on investor appetite. View the article on Pensions & Investments’ site here.
Real estate equity assets among the top 200 U.S. retirement plans with defined benefit assets stayed relatively flat for the year ended Sept. 30 as write-downs affected performance, while infrastructure continues to grow by leaps and bounds, according to the latest Pensions & Investments survey.
The differences reflect not only performance but the maturity of the real estate asset class, into which U.S. retirement plans have invested for decades, while infrastructure has been one of the fastest growing asset classes from virtually nothing less than 20 years ago.
. . .
“Matthew Ritter, partner and head of real assets investments at investment consultant NEPC, said in an interview that the rise in infrastructure assets is due primarily to so many pension funds creating new targets to the asset class over the past five years and building to those targets.
“Many are still underallocated,” said Ritter, so he expects those assets to continue to rise dramatically. Perhaps the most notable trend among this groundswell of investments is how the markets has evolved and expanded.
“It depends on each investor’s objectives,” said Ritter. “You can achieve return, income stream, partial inflation hedge, and overall a good diversifier for the portfolio.”
“If you look back historically, the traditional definition of infrastructure, you think of infrastructure as long-duration assets with stable cash flows, frequently in a kind of monopolistic environment.”
While that would apply to the traditional areas of investment, such as roads and electric transmission lines, Ritter said he’s seen a big growth in the areas of digital infrastructure, energy transition and renewable energy.
“We’ve increasingly seen managers view infrastructure more as private equity in nature in terms of their risk/return profile,” said Ritter. “That dynamic has expanded the appeal of infrastructure.”
Click here to continue reading the full Pensions & Investments article.