5 'non-negotiables’ driving the future of infrastructure investment

When a cargo ship plowed into a bridge in Baltimore in the U.S. just over a year ago, it caused a catastrophic collapse. Six construction workers lost their lives while filling potholes, as the road they were working on crumpled beneath them.

This tragic event was the critical intersection of two things: an old bridge well past its use-by date, and a ship under automation that lost power for 30 seconds.

In just a single example, it shows how underinvestment in infrastructure can have devastating consequences - and if we want to rely on automation, then the world needs security of supply and reliable electricity grids.

I spoke to Sarah Shaw, global portfolio manager and CEO/CIO of 4D Infrastructure about the current market shifts and growth drivers shaping global infrastructure and how it is deeply embedded in the world’s most powerful economic forces. 

For the full experience, watch the interview below:

Please note this interview was filmed 23rd April, 2025.

Navigating geopolitical turbulence

“Infrastructure as an asset class tends to be resilient,” Shaw says. “Its long-term, visible earnings streams and macro diversity allow it to weather many storms better than general equities.”

Still, she’s realistic about the risks, and doesn’t sugar coat the potential implications of a second Trump presidency. His campaign rhetoric and early moves — tariffs, immigration control, and a harder line on clean energy — have already rattled global markets. The recent 'Liberation Day' threw the sector into disarray.

“Clearly it was a disaster in terms of headline impact,” Shaw says. "We are really sitting in a 90 day period of uncertainty at the moment."

And no one wants to make bold moves while policy remains unclear. But it also creates opportunity for those who can look beyond the noise.

Shaw says U.S. ports and rail companies could see short-term volume surges as tariffs loom, followed by long-term shifts as we may see a reallocation of trade routes. Supply chains - particularly those tied to renewables and nuclear energy - may also face problems. And as always, interest rates play a critical role.

That said, other regions are telling a very different story. Europe is inching towards rate cuts and is boosting infrastructure spending with stimulus. Parts of Latin America - especially Brazil - are enjoying robust growth and could even benefit from U.S. policy changes.

The beauty of infrastructure, she notes, is that it spans both rate-sensitive and growth-sensitive assets. In other words, the sector can adapt.

“It’s noisy,” Shaw says. “But we cut through the volatility and focus on fundamentals.”

Two pillars of infrastructure

Infrastructure is often misunderstood as a single, defensive asset class. In fact, at the heart of infrastructure investing are two distinct sub-sectors, each reacting differently to macro conditions:

• Essential services/regulated utilities - These include water, gas, and electricity networks. They’re largely immune to economic cycles and tend to shine in downturns and falling rate environments.
• User-pay assets – Think toll roads, airports, ports, and railways. These are closely tied to economic activity and offer explicit inflation hedges. They thrive when GDP growth and inflation are high.

This split allows infrastructure investors to tactically shift allocations based on market conditions and Shaw’s current portfolio reflects this nuanced view, being overweight in Europe - around 47% of the portfolio - and underweight North America due to the Trump-related risks. Right now, Shaw says she prefers European utilities for their rate sensitivity and Brazilian transport assets for their exposure to demand and inflation.

5 Global growth thematics driving infrastructure

Whether interest rates go up or down and whether Trump is in the White House or not, these five infrastructure themes are non-negotiable. “They must happen,” Shaw insists.

1. Replacing aging infrastructure – Much of the developed world’s infrastructure is crumbling. Without major upgrades, we risk significant negative social and economic consequences.
2. Population growth – Global population is expected to exceed 10 billion by 2100 - that’s two billion more people needing power, water, and transport. With the East getting younger and the West getting older, both require different forms of infrastructure.
3.  Emergence of the middle class – 85% of the world lives in emerging markets, and as their wealth increases, so does demand for infrastructure. 
4. Energy transition – Net zero goals require massive investment in green energy, grids, and transport. Shaw highlights Europe’s push into renewables and grid upgrades as a key example: “Without huge investment in infrastructure…the world has no hope of net zero”.
5. Technology – AI and big data demand huge amounts of power and digital infrastructure. Without towers and electricity, the tech boom stalls. “A ChatGPT search uses 10 times the energy of a Google search,” Shaw says. 

The middle class megatrend

Of the five growth themes, Shaw singles out the rise of the middle class in emerging markets as perhaps the most powerful — and misunderstood.

“Infrastructure is the first driver of the emergence of the middle class – and the biggest beneficiary of it,” Shaw says.

That starts with clean water and gas for cooking, but quickly escalates to roads, ports, logistics chains, and eventually air travel. “Less than 10% of Chinese citizens have passports,” she notes. “Yet they already drive over 40% of global air traffic growth. The scope is enormous.”

Investors can access this trend through direct emerging market infrastructure investments, or through developed-market assets like global ports and airports that serve those populations.

2 stock picks for investing in our global future

Two recent investments showcase 4D Infrastructure’s thesis in action. While utilities, particularly in the electric and gas sectors, are Shaw's largest allocations, her largest holding is in Cellnex (BME: CLNX), Europe’s biggest independent communications tower company, riding the tech infrastructure wave. And in local exposure, she recently added APA Group (ASX:APA), Australia’s dominant gas pipeline network, which they found was oversold, but had an entry point that offered quality assets, a strong yield of 7%, and underpinned by a good valuation.

Whether it’s supporting population growth, replacing aging grids, or powering the AI age, infrastructure isn’t just defensive, it’s growth-driven - and it seems, the world right now needs a lot of it.