KEY FINDINGS OF THE 2025 INSTITUTIONAL INFRASTRUCTURE ALLOCATIONS MONITOR

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1. Target allocations to infrastructure increased for the second consecutive year, rising to 5.9%, a 40 bps gain from 2024 and an 80 bps increase since 2023. Twenty-three percent of institutions expect to increase their target allocation over the next 12 months compared to just 2% indicating plans to lower targets. This continued growth reinforces infrastructure’s growing role as a strategic, long-term portfolio allocation.
    

2. Institutions remain meaningfully under-allocated, though the gap between actual and target allocations narrowed. Institutions are under-invested by an average of 100 bps, down from 120 bps in 2024. The convergence between actual and target allocations may attributed to a “numerator effect”, as infrastructure investments delivered strong returns, while the pacing of commitments to new investments moderated and portfolios saw limited realizations and distributions.
    

3. Infrastructure portfolios delivered strong performance in 2024, with average returns at 9.6%, a rebound from lackluster levels in 2023. Over a trailing three-year period returns averaged 9.4%, slightly ahead of target returns, and demonstrating resiliency in a volatile market. 
    

4. Investor conviction remains positive, with an average conviction score of 7.0 out of 10, reflecting sustained investor confidence despite market volatility and global geopolitics. Insurance companies and sovereign wealth funds continue to report the strongest conviction, while Asia Pacific institutions lead in both conviction and performance.
    

5. Geopolitical risk is the top concern for infrastructure investment, cited by 41% of institutions in 2025—up sharply from 9% in 2024. Concerns about valuations and interest rates have diminished, while regulatory risk persists, highlighting the growing impact of global political dynamics on infrastructure strategies.
    

6. Digital and transportation infrastructure sectors remain in favor, as 28% and 19% of institutional investors, respectively, indicate an intention to increase deployment pacing over the next 12 months. However, institutions expect to moderate their pace of commitments across all sectors, signaling a more measured approach to deployment in the near term amid macroeconomic uncertainty and increasingly mature portfolio exposure.
    

7. Infrastructure debt is gaining favor, particularly among investors in EMEA, as institutions seek lower-risk, yield-oriented alternatives with downside protection. While adoption remains uneven, institutions are increasingly evaluating debt through private credit teams, signaling a shift in how institutions approach the strategy.
    

8. Institutions are favoring capital allocations to Core+ and Value-Add strategies, reflecting a broader preference for moderate risk with enhanced yield potential. Core strategies remain relevant but have taken a backseat to higher-return approaches. 
    

9. Commingled funds remain the predominant investment vehicle for most institutions, though direct and separate account activity is growing, particularly among EMEA and Asia Pacific-based investors. Appetite for first-time managers remains tepid, reinforcing institutional preferences for scale, experience, and alignment.
    

10. ESG integration remains widespread, but sentiment is polarizing. While 60% of institutions consider ESG at least moderately important, only 4% now rate ESG as extremely important—down from prior years. Australia, Canada and Europe continue to lead in ESG adoption, while support from US-based investors is mixed and an increasingly political topic.