Stable earnings, rising capex, better value: the case for listed infrastructure

Infrastructure is often sold to advisers as a defensive allocation, useful for ballast when markets turn volatile. Shane Hurst’s argument is that this framing now undersells the asset class. In his view, global listed infrastructure is not simply a source of stability, it is sitting inside a genuine investment and earnings super cycle. This is supported by decarbonisation, network upgrades, AI-related power demand and a valuation gap between listed and unlisted markets. For advisers used to thinking of infrastructure as slow and steady, the more interesting question may now be whether the listed market is offering both resilience and a structurally stronger growth outlook.

The growth story is bigger than many investors realise

Hurst’s central point is that listed infrastructure is benefiting from a set of long-duration themes that are now hard to ignore. Decarbonisation is one of these, with the retirement of hydrocarbon assets, electrification of networks and the buildout of renewables driving multi-decade capital expenditure. This is not a niche sustainability story. It is a system-wide rebuild of essential networks, and regulated utilities are right in the middle of it.

That capital intensity matters because, in infrastructure, investment often translates directly into future earnings. Hurst notes that the average asset base growth for a utility has shifted from roughly zero to 2 per cent a year in 2010 to more than 10 per cent today. In a regulated model, that is significant. Utilities earn a return on equity on the capital rolled into their regulated asset base, which means stronger investment can feed through to more visible and sustained earnings growth over time.

AI has only intensified that dynamic. Hurst is clear that utilities and power generation are now central to enabling the buildout of data centres. More demand for electricity, more network reinforcement and more need for new generation all combine to extend the capex runway. In the US alone, utilities are expected to invest in the next five years what they spent in the previous ten. That is not incremental change. It is a major step up in the earnings opportunity set for the sector.

Renewables are not dead, and earnings are improving

A second key strand of Hurst’s argument is that the investment case for infrastructure should be judged not just by the scale of spending, but by what that spending is doing to earnings. On this measure, he argues, the picture is increasingly compelling. Regulated utilities that once offered modest earnings growth and reliable dividends are now delivering a much stronger total return profile, driven by a combination of higher EPS growth, visible asset base expansion and continued income.

The contrast he drew was stark. In 2011, a typical US utility might have generated around 3 per cent earnings growth and a 4 per cent dividend yield, producing a total return expectation in the high single digits. Today, he says, the same segment is delivering closer to 8 to 10 per cent EPS growth, with much longer transparency on future investment pipelines. That pushes the expected total return profile into the low to mid-teens.

Importantly, Hurst also pushed back on the idea that renewables have somehow fallen away as an infrastructure theme. In his view, the opposite is true. AI-driven power demand is actually increasing the need for renewable installations, even as gas and nuclear remain part of the broader generation mix. Pre-AI, renewable installations in the US were growing around 6 per cent a year. Post-AI, Hurst expects something closer to 15 per cent annually over the next five years. That matters because it reinforces the breadth of the buildout story. This is not just about one technology or one source of power. It is about the full network.

Pull quote

“We are able to be index agnostic and really deliver a stable outcome in very volatile markets.”

Stability still matters, especially now

Even with the stronger growth narrative, Hurst does not abandon infrastructure’s traditional appeal. In fact, he argues that earnings stability remains one of the sector’s greatest strengths, particularly in volatile markets. His comparison between global listed infrastructure and global equities was designed to make that point clear. Over the past 25 years, global equities have seen negative EBITDA growth far more often than listed infrastructure. For advisers, that stability of underlying earnings is not a minor feature. It is a large part of why infrastructure belongs in portfolios.

Hurst also suggests the market has not fully caught up with that reality. Since around 2021, listed infrastructure returns have lagged what underlying EBITDA growth would imply, creating what he sees as a valuation opportunity. In his telling, prices have not yet fully reflected the compounding in earnings and the quality of cashflows now available in the asset class. That is where his argument moves from strategic allocation to tactical appeal. Listed infrastructure is not only stable, it may also be undervalued relative to its earnings trajectory.

This is especially relevant when compared with private markets. Hurst noted that large pools of unlisted capital remain hungry for infrastructure assets and that listed markets are often the most liquid way to gain exposure. That dynamic can be supportive for listed valuations over time, particularly where public markets are still trading below what private buyers may be willing to pay for comparable assets.

Active management matters more than index exposure

The final element of Hurst’s case is that infrastructure is not a market where passive exposure necessarily captures the full opportunity. ClearBridge’s approach is deliberately index-agnostic, built around a proprietary definition of what counts as true infrastructure. That matters because broad listed infrastructure indices can include businesses with more commodity sensitivity, construction exposure or cyclical characteristics than many investors might expect.

For Hurst, active management is valuable because it allows managers to isolate the higher-quality, essential-service characteristics investors actually want from infrastructure, then weight portfolios according to risk-adjusted return rather than index construction. In that sense, his argument is not just that infrastructure looks attractive, but that the way advisers access it matters.

Listed infrastructure is no longer just the quieter sibling of private infrastructure. It has its own earnings cycle, its own valuation case and its own role in portfolios. For advisers looking for assets that can offer income, defensiveness and a more visible growth path, Hurst is making the case that listed infrastructure deserves a closer look.