If you’re new to investing and want to understand the basics before exploring specialist areas like infrastructure, our guide to getting started can help you build confidence step by step.

Key benefits of investing in infrastructure funds

The insatiable appetite for better infrastructure projects means lucrative contracts on offer for businesses, many of which are listed on global stock markets. This creates opportunities for investors who have put their faith – and money – into infrastructure funds that have exposure to different sub-sectors.

So, what are the key potential benefits?

1. Stable income generation

One of the attractions of infrastructure assets is that they often have long-term contracts in place for construction or ongoing fee generation. It’s one of the reasons many infrastructure funds are marketed as income-focused and useful for investors seeking an additional revenue stream.

2. Hedge for inflation

Inflation remains one of the world’s hottest topics. Rising inflation means the price of goods and services is increasing. It also means savings and investments have to work harder. However, the revenues generated by some infrastructure assets are often linked to inflation – or at least have the scope for increases – which affords investors some protection.

3. Lower volatility

As many infrastructure assets are regarded as being stable and always in demand, their presence can help reduce overall volatility. Even during economic downturns, businesses require roads; importers and exporters need ports; and people everywhere want excellent communication networks.

4. Longer-term growth

Another benefit is exposure to longer-term growth trends. This is particularly the case when an infrastructure project is linked to areas such as 5G networks or renewable energy. In addition, infrastructure funds can provide diversification for an investor’s existing portfolio, depending on their current holdings.

Risks and challenges of infrastructure funds

Unfortunately, there are no guarantees with investing. Despite being an attractive long-term theme, infrastructure funds can face potential pitfalls.

• Political appetite: New governments coming to power can cancel existing projects if they don’t align with their manifesto objectives. They can also be affected by changing priorities.
• Planning delays: Getting permission for projects can be a very costly and time-consuming process. It’s important to consider the potential impact on your holdings.
• Financial backing: We are talking about multi-billion-pound projects, so financing can be an issue. Linked to this is interest-rate sensitivity if the backing relies on borrowed money.
• Construction problems: Delays, companies failing to honour their promises, and supply shortages can also cause issues. We are talking multi-billion dollar projects, so it’s unlikely to be smooth sailing.

How to invest in infrastructure funds

You can access infrastructure through open-ended funds, such as unit trusts and OEICs, as well as investment trusts and exchange-traded funds. Whatever fund you choose, it’s important to understand its investment approach and how it invests to ensure it’s aligned with your philosophy.

Don’t be misled by a fund’s name. Just because it has “infrastructure” in its title doesn’t necessarily mean it will invest as you expect. Nothing replaces your own research. You should also research the fund manager at the helm. Are they experienced? Do they possess a decent track record of delivering returns in different economic cycles?

Once you’ve decided on a fund – or funds – consider how to hold it. For many people, a tax-advantaged Stocks and Shares ISA is a good option. For longer-term investors, Self Invested Personal Pensions (SIPP) are also worth considering. However, for both routes, it’s worth seeking professional advice to ensure they’ll meet your needs.

Top infrastructure funds to consider

FundCalibre’s expert team creates a preferred list of just 200 portfolios across various sectors, having analysed more than 3,000. Its comprehensive process includes using its AlphaQuest quantitative screening tool and carrying out face-to-face manager interviews.

Infrastructure funds are among those it scrutinises, with only the very best portfolios in any sector being afforded Elite Rating status. The good news is that there are excellent infrastructure funds available, whether you want a globally oriented or UK-focused portfolio.

Let’s start with something close to home – the TM Gravis UK Infrastructure Income fund. This mainly focuses on investment trusts exposed to different types of UK infrastructure. This currently includes exposure to power & utilities, social infrastructure, transportation & logistics, digital infrastructure, and accommodation. We believe it’s a well-diversified fund that offers an excellent way to invest in the UK’s infrastructure needs. It also targets an income of 5% per annum.

For investors with a more international focus, there’s First Sentier Global Listed Infrastructure, which aims to deliver income and some capital growth. This portfolio is a recognised leader in listed infrastructure investment, benefitting from a strong team and a good long-term track record. It currently has exposure to a wide variety of countries, including the United States, Australia, France, the UK, China, Mexico, Italy, Brazil and Japan.

Is an infrastructure fund right for you?

Infrastructure is a long-term theme, so it’s certainly worth considering, but it will largely depend on your investment objectives and risk tolerance.

For example, if you’re looking for an income generator that can act as an inflation hedge, then an infrastructure fund could be a useful addition. However, if you need to generate bumper double-digit returns, you might be better off focusing on higher-growth areas, such as emerging markets. For many people, infrastructure will form one part of a larger portfolio. While the actual allocation will vary by investor, 5%-15% is a suitable range.

To decide, you’ll need to consider existing holdings. Have you already got exposure to infrastructure-linked companies? If so, you may want to check you’re not too concentrated.

FAQs about infrastructure funds

*Source: McKinsey & Company, 9 September 2025