Here, we take a closer look at the infrastructure landscape we analyzed back in August of 2021 and dig into the varying performance across geographies. Using Cobalt Market Data, we examined infrastructure funds from the past 10 years across North America, Western Europe, and Emerging Asia by internal rates of return (IRR) to understand how the investing landscape may differ across regions.
Insight/2022/03.2022/03.01.2022_Infrastructure_Chart/infrastructure-performance-by-geography.png)
Key Takeaways:
- Emerging Asia has offered the greatest returns over the past decade with the highest top-quartile group as well as the highest median IRR of 12.72%, compared to 11.08% for North America and 9.63% for Western Europe
- Western Europe offers the “safest” option with the lowest spread between the first and third quartiles. While not having the upside of the other two regions, Europe has given the most stable range of returns over the past 10 years.
- Conversely, North America has the widest range of outcomes, with the lowest range for bottom-quartile performers. While this could be attributed to the sheer number of North American infrastructure funds, the numbers tell the story of a high-risk, high-reward investment environment.
Looking Ahead:
- Global events will shape the next decade of infrastructure investment. The post-pandemic recovery will continue to weigh heavily on resources put towards infrastructure. While they may not persist for the duration of a vehicle with a 10+ year investment horizon, the supply chain issues seen across the world may come to play a factor in this space as well.
- In China, the Evergrande fallout may reverberate throughout the investing landscape of real estate and infrastructure in Emerging Asia
- In North America, the recently passed infrastructure bill will inject trillions of dollars in projects into the space. However, it remains to be seen how this affects the performance of the players in the space.
This article was originally published on the Cobalt website.
The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.
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