Infrastructure moves beyond defensive play: Lonsec

Binaya Dahal

Journalist

22 May 2026

Infrastructure is no longer a “purely defensive” asset class, as artificial intelligence, electrification and energy security concerns reshape its return profile, according to Payal Vasa, real asset manager at Lonsec.

Vasa said investors need to rethink how they assess risk and return as long-term structural forces are blurring the infrastructure’s traditional boundaries and re-defining the sector through a mix of income, resilience and growth.

“Infrastructure has typically been used as a defensive part of portfolios, mainly for income and diversification,” she said. “While that hasn’t changed, the role it plays is starting to broaden. It is now also being looked at as a source of growth, supported by a few clear long-term trends.”

The rapid expansion of digital infrastructure has emerged as the biggest drivers of the shift, with investment in data centres, fibre networks and connectivity accelerating alongside the growth of artificial intelligence and cloud computing.

“This demand is less linked to economic cycles and more to a structural trend,” Vasa said.

She added electrification is also reshaping investment needs with rising power consumption from digital infrastructure and industry, combined with the energy transition, placing strain on ageing grids and increasing demand for transmission and storage assets.

“While renewables remain part of the story, there is more focus on transmission and storage: assets that are essential to making the system work and tend to have more stable cash flows,” Vasa said.

At the same time, war in Iran have intensified the focus on energy security, prompting governments and investors to prioritise infrastructure that strengthens domestic supply and system resilience.

“This has resulted in support to sustained investment in both traditional and transition-related infrastructure,” she said.

Furthermore, Vasa said the definition of infrastructure is broadening, with managers allocating capital not only to toll roads, airports and utilities, but also to digital platforms and distributed energy systems.

However, she warned the wider opportunity set also brings greater dispersion in outcomes.

“While this expansion means increased opportunities for investment managers, it also introduces greater dispersion in risk and return outcomes, as not all assets exhibit the same defensive characteristics historically associated with the asset class.”