Investor Knowledge
April 16 2024

Private Infrastructure: A New and Open Era for Long-term Investing

5 min read

Private infrastructure has become one of the fastest-growing asset classes for institutional investors over the past decade.1 Until recently, most of the fundraising had been in closed-end private equity structures. However, over the last three years the number of open-ended funds has more than doubled. What accounts for the change, and what are the relative merits of open-end and closed-end structures?

A new article from TD Global Investment Solutions looks to answer those questions.

The difference between the two structures goes far beyond an investment end date and impacts the entire life cycle of an investor's commitment. Proponents of open-ended funds highlight the natural fit between the multi-decade cash flows of an infrastructure project and the long-term objectives of investors. In addition, the client experience is much different. This is reflected in a smoother path of capital, as investors are able to access a known pool of investments and can rebalance their allocation over time, as they do with other asset classes. Rebalancing a portfolio is one of the more powerful tools in portfolio management for achieving long-term goals and better risk-adjusted returns. In a closed-end fund, investors typically can't access their capital until the end of the fund's life. This creates a non-linear path for their capital, requiring investment in a series of closed-end funds or 'vintages' to maintain the desired allocation.

Institutional investors have long invested in open-ended funds within public equity, fixed income and private real estate. Infrastructure funds have remained the outlier, having had their debut through private equity firms with mid-sized investment organizations accustomed to the closed-end structure typical in the private equity space. However, as infrastructure continues to demonstrate its value in a balanced portfolio, demand has grown among smaller institutions and investors, for whom the cost and complexity of closed-end structures may be an impediment.

While the debate is sure to continue about the relative merits of open- and closed-end funds, one thing is certain: investors have never had more options to choose from.

For more details, read the full article.


1 Infrastructure Investor. As at Dec 31, 2022.
The information contained herein is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax or trading strategies should be evaluated relative to each individual's objectives and risk tolerance. This material is not an offer to any person in any jurisdiction where unlawful or unauthorized. These materials have not been reviewed by and are not registered with any securities or other regulatory authority in jurisdictions where we operate. Any general discussion or opinions contained within these materials regarding securities or market conditions represent our view or the view of the source cited. Unless otherwise indicated, such view is as of the date noted and is subject to change. Information about the portfolio holdings, asset allocation or diversification is historical and is subject to change. This document may contain forward-looking statements (“FLS”). FLS reflect current expectations and projections about future events and/or outcomes based on data currently available. Such expectations and projections may be incorrect in the future as events which were not anticipated or considered in their formulation may occur and lead to results that differ materially from those expressed or implied. FLS are not guarantees of future performance and reliance on FLS should be avoided. Any projections, targets, or estimates in this presentation are forward-looking statements and are based on our internal research, analysis, and assumptions. There can be no assurances that such projections, targets, or estimates will occur and the actual results may be materially different. Additional information about our assumptions is available upon request. Other events which were not taken into account in formulating such projections, targets, or estimates may occur and may significantly affect the returns or performance.TD Global Investment Solutions represents TD Asset Management Inc. ("TDAM") and Epoch Investment Partners, Inc. ("TD Epoch"). TDAM and TD Epoch are affiliates and wholly-owned subsidiaries of The Toronto-Dominion Bank. ®The TD logo and other TD trademarks are the property of The Toronto-Dominion Bank or its subsidiaries.