The top 50 institutional investors in this year’s bigger and more comprehensive version of our Global Investor ranking, allocated $654 billion to the asset class in 2023, a 14.7 percent increase on the 2022 figure of $570 billion. For the 75 entries, the total allocation to infrastructure was $723 billion (scroll down for the full list).
Top-ranked, for the second year in a row, is Canadian Caisse de dépôt et placement du Québec with an infrastructure allocation of $45.1 billion, representing 13.8 percent of its total portfolio and a 12 percent increase on the previous year’s allocation.
The Abu Dhabi Investment Authority ranks second in another repeat of last year’s list, but its position is based on a technicality; ADIA invests between 2 and 7 percent of its AUM in infrastructure, and the second place corresponds to an estimated 5 percent allocation. An allocation closer to 2 percent would rank ADIA as 11th, while a 7 percent allocation would very safely secure the top spot for the sovereign wealth fund.
CPP Investments is, again, ranking third, and the Canadian dominance at the top is striking. Five of the 10 top spots, corresponding to $159 billion in allocations, are maple-scented with Ontario Teachers’ Pension Plan in sixth place, OMERS at eighth and PSP Investments moving up one place, enough to land it in the top 10 for the first time.
Two European entrants – Dutch APG and Germany’s Allianz Group – and two APAC-based investors, National Pension Service of Korea and AustralianSuper, round off the rest of the top 10.
Australian Retirement Trust fell to 12th place, as its 12 percent increase in allocation was less than half that of the three peers immediately above it: BCI, PSP Investments and Allianz Group.
And while CDPQ sits in the top spot for having the largest infrastructure portfolio in absolute terms, OMERS stands out for having the largest allocation to infrastructure, percentage-wise. With 28 percent of its total AUM having an infra stamp on it, OMERS places significant distance – 11 percentage points – between itself and OPTrust, which has the second-highest allocation to the asset class.
The public pension backbone
With public pension funds accounting for 48 of the 75 entries and occupying eight of the top 10 spots, it’s fair to say they are the backbone of the infrastructure industry. Furthermore, 14 public pension funds allocate 12 percent or more of AUM to infrastructure, and allocations of this size are unique to this type of investor.
The public pension fund outlier is Japan’s Government Pension Investment Fund with a rather minor 0.6 percent allocation, albeit from a $1.6 trillion pot. GPIF’s infrastructure allocation has risen by 25 percent since last year, and while this may be the beginning of something substantially bigger, some of the rise is due to foreign exchange fluctuations, according to the pension.
The Australian supers’ contribution to infrastructure remains impressive. There are no fewer than 10 Australian public pension funds in the list of 75, averaging an 11 percent allocation and jointly investing $114.5 billion in the asset class. By comparison, the 13 European public pension funds average a 7.5 percent allocation and jointly contribute $82.4 billion.
The list’s four Danish public pension funds provide a statistical outlier. ATP, PKA, Industriens Pension and PensionDanmark have all slid in the ranking, and both ATP and PensionDanmark have seen their allocation to infrastructure fall during 2023. The latter cited write-downs and divestments as the reason for the lower allocation.
IndustriensPension upped its allocation by 16 percent to $4.1 billion. That this wasn’t enough to keep the investor from falling three places underlines the strength of the 2023 infrastructure growth story.
Outlook for 2024
Infrastructure as an asset class has been growing at pace, and the average allocation for the 75 entrants listed is an impressive 7.2 percent of AUM. For the top 10 organisations, that number is 10.7 percent and every institution in the top 20 has increased the allocation from 2023, growing the investments into the asset class by an average of 14 percent.
Of last year’s group of 50, no fewer than 44 investors increased their allocation to infrastructure in 2023.
The asset class’s inflation-hedging characteristics have without a doubt been appealing, but perhaps there is also a recognition that investing for the future implies an investment in the future. If that is the case, then growth could be on the cards in 2024 even as inflation looks to be trending down.