Norges Bank Investment Management (NBIM) published a Discussion Note today on infrastructure investments which aims to provide an overview of the opportunity set, key risks and return driver.
In the note we argue that infrastructure investments represent a set of heterogeneous investment opportunities and that such investments in this respect are hard to fit into one asset category. The risk-return profile generally arises from the nature of the underlying asset itself, the environment in which it operates and the choice of investment vehicle.
Infrastructure investments can exhibit bond, real estate or equity characteristics. We find that different investors have different goals for their infrastructure investments, which leaves no “right” way to benchmark such investments.