Australian and Canadian Clues Help Reveal the Future of Infrastructure

Infrastructure has been a cornerstone asset class for years in Australia and Canada. Now, more investors are viewing it the same way.


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After 17 years consulting on private markets for Willis Towers Watson, Luba Nikulina felt disillusioned with asset management.

“I became one of the biggest skeptics of the value that we deliver as an industry. I just have seen so many managers out there and so many structures that are not aligned,” Nikulina told Institutional Investor.

In 2022, Nikulina left WTW to work for an asset manager that had the alignment she wanted: $140 billion IFM Investors, which was created and owned by pension funds. Now as the head of strategy at IFM, she is trying to bring some of the things the Australia-based firm does best to more parts of the globe, including a “completely different ethos” and its experience with infrastructure. “Despite being a bit skeptical of our industry, I still think there is a massive role that we are playing and, with the help of capital, creating change in society,” she said.

The timing is good for IFM, according to Nikulina and a recent report by her. Infrastructure has been thought of as a standalone asset class in Australia and Canada for decades and popular with the local pension systems. It has become a “mainstay of pension portfolios in both countries due to its ability to act as a natural inflation hedge and its lack of correlation with returns generated by listed equity and debt,” according to the report. For those same reasons and others, more institutions beyond those in Canada, Australia and parts of Europe, are considering increasing their investments in the area.

“With a track record spanning more than two decades, we can now conclusively say that the risks taken on by and returns enjoyed from infrastructure are significantly differentiated from any of the other asset classes that may sit within the private markets or alternatives sectors, meaning that infrastructure has truly come into its own as a standalone asset class,” the IFM report says.


After a tumultuous three years, investors don’t believe the coming few years offer much more certainty. So they are turning to sectors that can help them hedge against inflation and deliver uncorrelated returns. Additionally, infrastructure has some tailwinds that aren’t going away. Growing populations and economies around the world need new roads, bridges, utilities and more. Others eventually need to replace the aging infrastructure they already have.

But the digitization of the world and other global changes are creating the biggest demand. For example, artificial intelligence isn’t just a hot topic of conversation — it’s changing how businesses function and the AI tools they are using need infrastructure to power them, Nikulina explained.

Decarbonization was another example Nikulina shared. The global energy transition will arguably be the most significant structural change since the industrial revolution and over the next three decades, over $100 trillion will need to be deployed to restructure the global economy. Much of that will be in the form of new equity funding for renewable energy and climate change adaptation methods, according to IFM.

“It may be controversial in some markets, whether it’s going to be done for the right reasons or not,” she said. “But the reality is that the weather patterns are changing and for businesses to be sustainable, they need to have a pathway to decarbonize.”