How AI Turned Infrastructure Into a Must-Own Asset

Infrastructure took center stage at VettaFi’s Midyear Market Outlook Symposium on Thursday, drawing portfolio managers from Impax Asset Management and BNY Investments – Newton. Both argued that the asset class belongs in most portfolios as a dedicated allocation, not a tactical theme.

Key Takeaways:

• Experts at VettaFi’s symposium argued infrastructure deserves a dedicated allocation, not just a slot in a thematic sleeve.
• Artificial intelligence has recast energy demand, making utilities some of the market’s most sought-after holdings.
• U.S. power transformers are nearing their 40-year lifespan, creating what managers call a mandatory replacement cycle.

Infrastructure: Theme or Asset Class?

Cinthia Murphy, director of research at VettaFi, moderated the session, which was one of eight during the daylong event. Other topics included Japan equities, U.S. equity strategies, active bond management, municipal bonds, and AI-driven thematic investing.

At its core, the discussion came down to a single question: Is infrastructure a theme or a true asset class? How advisors answer that question shapes how they should size and position the exposure, said Brock Campbell, head of global research at BNY Investments – Newton.

Campbell landed firmly on asset class. Infrastructure offers downside protection, low correlation to other holdings, income generation, and inflation protection, he noted during the panel. Those characteristics argue for dedicated portfolio space, not a trend to rotate in and out of.

Thomas Morris Brown, portfolio specialist at Impax Asset Management, offered a complementary view. Brown said Impax treats the space as a theme because it cuts across sectors ranging from utilities and energy to technology and semiconductors.

Both agreed that artificial intelligence had reshuffled the investor conversation around infrastructure entirely. Campbell said he spent two decades covering the space when investors viewed the names as boring utilities and had little interest in the sector.

Power demand drove the shift, he said. Campbell described what he called a “dash to the electron.” Hyperscalers, the large technology companies running intensive AI operations, are racing to secure electricity wherever they can find it. He said the next phase will center on natural gas pipelines, followed by a nuclear renaissance, which he expects around 2030.

Bottlenecks Driving the Infrastructure Play

Brown provided a concrete example from the power grid. Most U.S. power transformers are approaching the end of their average 40-year lifespan, he said, creating a mandatory replacement cycle.

He also pointed to Siemens Energy as a holding in the Impax Global Sustainable Infrastructure ETF (BLDX). The company’s gas turbine order book is sold out through 2030, he noted.

Campbell discussed how the BNY Mellon Global Infrastructure Income ETF (BKGI) deliberately expands the definition of infrastructure. A typical benchmark allocates roughly 40% to toll roads and airports, he said.

See more: Worried About Inflation? Consider These 3 ETF Solutions

Brown said BLDX added to construction-sector holdings in recent weeks, a move that benefited the fund as inflation and rate concerns began to ease.

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