Invest
Listed v unlisted infrastructure
Among the alternative assets available to investors, experts and funds pay special attention to infrastructure – real-world assets and structures that are vital to the economy.
Listed v unlisted infrastructure
Among the alternative assets available to investors, experts and funds pay special attention to infrastructure – real-world assets and structures that are vital to the economy.
Infrastructure refers to large real-world economic assets, such as bridges, railways, ports, schools and even facilities for basic utilities like water and electricity.
Investments in infrastructure may be used to build the physical structures or aid in keeping these assets operational.
What does investing in infrastructure mean?
Traditionally, investing in infrastructure referred to direct investing or holding privately held assets. Known as investments in unlisted infrastructure, this strategy allows investors to have direct influence over the structure for as long as they retain the shares in their portfolio.
However, this strategy has more recently been popularised as a form of alternative investment. An increasing number of investment managers and companies have made it more accessible to the public through the Australian Securities Exchange as listed infrastructure.
Listed infrastructure are similar with unlisted in the sense that they are both investments in infrastructure. But while unlisted infrastructure refers to direct investment in the asset, listed infrastructure are investments in an entity that manages a portfolio of one or more infrastructure.
Listed v unlisted infrastructure: Which is better?
Investors may choose between listed and unlisted infrastructure – the more appropriate choice would depend on their investment objectives and risk appetite.
Both types have been proven to be a valuable asset to growth investors over the long term
If you wish to invest in infrastructure, consider the following factors first:
Unlisted infrastructure
Ownership:
Unlisted infrastructure investments allow investors to directly hold a portion of the infrastructure, along with a proportion of its gains and cash flows.
Liquidity:
Infrastructure are illiquid assets and unlisted infrastructure retains this quality. Unlisted infrastructure gives good returns over the long term, but it may take a while to turn your investment into cash if you suddenly need to sell your portion.
Diversification:
You may be limited to what your money can buy because you are directly investing in infrastructure projects.
Risk:
Your portfolio will not see volatility with unlisted infrastructures because they are not valued daily and they generally increase in value over the long term. Since the underlying assets are essential structures for the economy, demand rarely goes down, which means returns are usually more stable.
However, increasing demand for unlisted infrastructure also sees choices decrease as fees increase.
Listed infrastructure
Ownership:
Listed infrastructure investments allow investors to own shares in an entity that owns and/or operates a portfolio of infrastructure. You may gain exposure to a variety of infrastructure within the portfolio, but you have no say in choosing which ones will be included.
Investing in listed infrastructure is similar to buying shares of a company that manages the structures – you have a stake on some company matters but not over the infrastructure themselves.
Liquidity:
Infrastructure are generally illiquid assets, but listed investments provide more liquidity to your portfolio because they can be traded in the ASX.
Diversification:
Underlying companies of listed infrastructure typically manage the selection of assets to invest in and the strategy to use. In many cases, the fund managers invest in a variety of assets in one portfolio, which means listed infrastructure are typically more diversified.
Risk:
Listed infrastructure are more exposed to volatility because they are traded in the sharemarket.
The underlying structures themselves are not valued daily and don’t experience volatility; however, the entity that offers the portfolio are more exposed to market sentiments.
If you wish to invest in infrastructure, make sure to do due diligence before adding them to your portfolio. Likewise, it’s recommended to seek the advice of a professional who can take your investment objectives into consideration.
Explore nestegg to learn more about investing.
About the author
About the author
Stock market
Could this bull market be losing steam?
There’s an old investment adage that bull markets never die of old age, with the current market showing signs of cracking just months after the recovery, an industry expert warns. ...Read more
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Stock market
Could this bull market be losing steam?
There’s an old investment adage that bull markets never die of old age, with the current market showing signs of cracking just months after the recovery, an industry expert warns. ...Read more
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
