Infrastructure investments – a stable anchor in a volatile environment

German institutional investors see no reason to reduce their allocations to infrastructure in light of the current geopolitical situation. In a survey of the approximately 90 participants at the annual Palladio Partners Investors Day, more than 90% said that they intend to maintain their current allocation (55%) or even increase it (nearly 40%). More than half of those surveyed continue to give high priority to investments in Germany. At the same time, many investors would like to see further improvements to the general conditions for infrastructure investments in Germany. 
As well as taking a broad look at the current geopolitical environment and ways of addressing the high level of uncertainty in the markets, last week’s Palladio Partners Investors Day in Frankfurt focused in particular on specific investment themes.

More than 90% of respondents plan to maintain or increase their allocation to infrastructure 
When asked, “How is the current geopolitical situation changing your long-term assessment of the infrastructure asset class?” 55% of respondents said it had no impact on their assessment and that they had no plans to change their allocation. 38% said they would increase their allocation, because a diversified infrastructure portfolio shows resilience in the current geopolitical climate. Only 6% responded that geopolitical risk could lead to a reduction in their allocation to the asset class. 

German investors are happy to invest in their home market, but feel the investment conditions could be better 
Nearly two-thirds of respondents generally view the conditions for infrastructure investments in Germany as having improved. However, only about 13% see initiatives such as the Special Fund, the Germany Fund, or the Infrastructure Quota as a “significant improvement in the location’s attractiveness”. Nearly half of those surveyed (49%) see slight improvements, but also say that these are not yet sufficient and there is scope for further optimization. 
Just under a fifth (19%) saw no noticeable change, while another fifth (19%) stated that infrastructure investments receive better regulatory support outside of Germany. 

Bernd Kreuter, managing partner and co-founder of Palladio Partners, comments:  
“The performance of our portfolios and the results of our investor survey show that infrastructure is viewed as a robust long-term asset class, even in a challenging geopolitical environment. In particular, the stability of cash flows and the diversification effects continue to make a strong case for infrastructure investments.”