Regulators generally provide an allowed return regarding the underlying asset base of these essential companies, though how this occurs varies by region. If the regulator provides steady allowed returns on a growing asset base, we expect earnings to increase at the same pace as the underlying asset growth.
The concentrated market of 2024 and the return of inflationary pressures are good reminders of what sets infrastructure apart from other asset classes and why it will be valuable in 2025.
First, infrastructure offers a differentiated source of returns. Unlike general equities and real estate, the key driver of long-term returns for infrastructure investors is growth in the underlying asset bases.
