Update:
Principal Claritas is now Principal Asset Management Ltda. Learn more about our operations in Brazil.
Introducing our 2025 outlook
When the books closed on global markets at year end 2024, even the most steadfast investors in listed infrastructure (GLI)—us included—have been forced to face the sobering reality that GLI has underperformed global equities by a whopping 6.5 percent annualized over the prior five years.
Of course, it hasn’t all been painful, though we sometimes find ourselves pining for the increasingly distant 2022, when listed infrastructure’s inflation-protecting characteristics fully met the moment and GLI outperformed global equities by 14 percent. We also felt good about how the first nine months of 2024 evolved, with various central banks embarking on rate cuts and as U.S. utility and energy investors participated in the wave of generative AI enthusiasm. Although the most recent asset class performance has been frustrating, our team reached an important investment performance milestone last year—our five-year track record—and (mostly!) had fun doing it.
As we turn the page to a new year, the long-term risk and return profile of GLI continues to support its inclusion in portfolios.
Specific to 2025, we offer five reasons to be a buyer of the asset class:
- Today’s valuations offer an attractive entry point for long-term investors
- We expect fundamentals will continue to be strong
- A lot was priced into markets post-U.S. election, and some near-term reversion could benefit pockets of GLI
- It may be a good time to complete your private infrastructure allocation with GLI
- Diversifying your equity exposure continues to make sense
We conclude with a brief discussion of the main reasons investors may wish to remain on the sidelines for one more year.
As we turn the page to a new year, the long-term risk and return profile of GLI continues to support its inclusion in portfolios. For more of our thoughts, read the full 2025 outlook here.
Disclosure
Important information
Risk Considerations
Investing involves risk, including possible loss of principal. Infrastructure issuers may be subject to regulation by various governmental authorities and may also be affected by governmental regulation of rates charged to customers, operational or other mishaps, tariffs and changes in tax laws, regulatory policies and accounting standards. Foreign securities involve special risks, including currency fluctuations, lower liquidity, political and economic uncertainties and differences in accounting standards. Some international securities may represent small and medium-sized companies, which may be more susceptible to price volatility and may be less liquid than larger companies.
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