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Infrastructure: An Emerging Tool for Enhancing Portfolio Efficiency

  • Strategy insight

June 5, 2026 | 8 min read

Holland Davis

Principal

Tucker France

Vice President

Anthony Crawford

Vice President

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As the private infrastructure asset class matures, we explore what 15 years of performance data reveal about its role in optimizing private markets portfolios.

Key takeaways:

  • A review of 15 years of performance data suggests private infrastructure allocations can enhance risk-adjusted outcomes, as measured by the Sharpe ratio.
  • Our study suggests that allocating to infrastructure secondaries can further enhance a portfolio’s risk/reward profile by incorporating tactics tailored for the infrastructure sector.
  • In many ways, infrastructure investments are delivering on the hoped-for benefits of private real assets.

The private infrastructure asset class has emerged as a powerful tool for enhancing portfolio efficiency across both traditional multi-asset portfolios and private-market allocations.

Portfolio efficiency refers to the ability to maximize expected return for a given level of risk. Proprietary data collected by HarbourVest, combined with market data from Preqin, shows that infrastructure allocations can both improve portfolio returns and lower overall risk, as captured by the Sharpe ratio. Moreover, the effect becomes more pronounced as the allocation grows in size.

Building on this analysis, we believe infrastructure secondaries have key characteristics that offer the potential for a risk-adjusted return advantage while enhancing operational management and reducing blind pool risk.

With powerful secular forces driving infrastructure demand, we think this trend could benefit portfolios for many years to come.

For our full analysis, contact your HarbourVest representative. A preview of our thinking is shared below.

Infrastructure’s portfolio impact

Across every private markets portfolio construction we tested, infrastructure improves risk-adjusted returns while delivering low downside capture, attractive long-term compounding, and meaningful diversification benefits.

These risk and return benefits are reflected in Sharpe ratios for both multi-asset and alternatives-only portfolios. The Sharpe ratio measures return per unit of volatility, and while volatility is an imperfect measure of risk in private portfolios, it is a standard measure for comparing portfolio efficiency.

To highlight the role of infrastructure, our analysis modeled equal-weighting allocations across common private markets asset classes – private credit, private equity, private real estate, and private natural resources – with infrastructure allocations of 0%, 10%, 20%, and 30%. Each time the allocation to infrastructure increased, the impact to the overall portfolio was a decrease in volatility and an enhancement of overall expected return.

Figure 1

Source: Preqin and proprietary HarbourVest analysis as of September 30, 2025.

Figure 1 reflects equal‑weight alternatives portfolios with 0%, 10%, 20%, and 30% infrastructure allocations. Portfolio analysis is conducted using a standard modern portfolio theory framework to evaluate changes in risk‑adjusted returns across alternative private markets allocation weights. No volatility smoothing, appraisal adjustments, or stochastic simulations are employed. Expected asset class returns are proxied using trailing 10‑year realized returns. Portfolio volatility is calculated based on annualized 10‑year realized asset volatilities and corresponding 10‑year realized pairwise correlations. This industry data reflects the fees, carried interest, and other expenses of the funds included in the data set. The fees, carried interest, and other expenses borne by investors in a HarbourVest fund / account may be higher or lower than the fees and expenses of the funds reflected in the data set. Not representative of any HarbourVest fund, account, and not representative of any HarbourVest experience. Past performance is not a reliable indicator of future results. Equal weighting was used as a starting point to remove any bias in allocation preferences across other asset classes, and to isolate the impact of adding infrastructure.

These results suggest that infrastructure has delivered long-term returns approaching those of private equity, with a level of volatility closer to private debt. This “Goldilocks” profile has been particularly visible over the past three years – a period with the highest inflation and macroeconomic volatility in the last 15 years. During that period, infrastructure has been the best performing alternatives asset class.

In addition, infrastructure provides substantial diversification benefits without necessarily increasing portfolio volatility potential. Crucially for portfolio construction, infrastructure exhibits moderate correlations with other private asset classes; only natural resources, a historically volatile segment, exhibits lower correlations relative to private equity.

Figure 2

Correlation Matrix (Based on Quarterly Returns from 12/31/2015 – 9/30/2025)

Source: Preqin and proprietary HarbourVest analysis as of September 30, 2025. Past performance is not a reliable indicator of future results. This industry data reflects the fees, carried interest, and other expenses of the funds included in the data set. The fees, carried interest, and other expenses borne by investors in a HarbourVest fund / account may be higher or lower than the fees and expenses of the funds reflected in the data set. Not representative of any HarbourVest fund, account, and not representative of any HarbourVest experience.

What are infrastructure’s advantages?

Infrastructure’s appeal rests on durable business models and the potential for  predictable, low correlation cash flows. These businesses and/or assets typically provide essential services with inelastic demand, rely on capital-intensive and long-duration assets, and operate under revenue frameworks that are regulated, contracted, or availability based. Together, these features can make infrastructure a reliable return engine and an effective volatility dampener within investment portfolios across macroeconomic cycles.

These fundamental characteristics are reinforced by powerful secular forces reshaping real asset demand:

In time, we would expect rising infrastructure fund sizes and increasing competition in the asset class to push up entry multiples and reduce these tailwinds. However, the capital intensity of infrastructure remains a critical feature of the asset class and a key driver of future performance. Modernization, electrification, decarbonization, digitization, and supply-chain transformation are all CapEx-driven megatrends that will require trillions of dollars of equity investment in the coming decade. It’s our view that this deep and recurring need for fresh capital will allow the asset class to scale without entirely eroding its core characteristics.

Are there benefits to using secondaries to invest in infrastructure?

We believe investors can enhance infrastructure’s downside protection, reduced cyclicality, and secular growth profile by allocating capital to secular growth segments and applying a toolkit of tactics developed by private equity and refined for infrastructure.

While primary fund commitments remain foundational, we think infrastructure secondaries represent a powerful – and still underappreciated – tool for further enhancing portfolio outcomes. In our experience, infrastructure secondaries can implement strategies that:

  • Shorten asset duration by investing in more mature assets and portfolios
  • Improve capital efficiency by accelerating distributions and reducing unfunded commitments
  • Enhance diversification across fund and company exposures by count and by accessing a broader range of underlying vintage years
  • Provide a counterweight to return dispersion as infrastructure strategies grow in scale and complexity by investing in de-risked and existing assets or portfolios.

As the infrastructure market matures, we believe secondaries will be an increasingly critical lever for LPs looking to preserve infrastructure’s “Goldilocks” profile in a more competitive and capital‑intensive environment.

Infrastructure vs other types of real assets – a time to rethink

We believe the strength of private infrastructure strategies relative to other real-asset segments – such as real estate and natural resources – is stark enough to push institutional investors to rethink their real assets allocations.

For example, HarbourVest’s study of infrastructure performance can contrast with natural resources. Institutional investors often question whether natural resource returns compensate investors for the asset class’s volatility (which is higher than that of private equity across most periods). Similarly, real estate has posted the worst returns across most periods ended year-end 2025, with significantly higher risk than both infrastructure and private credit.1

Institutional investors have endured many challenging cycles in real assets, which have often underdelivered on expectations for inflation protection, stable cash flows, and lower risk. Meanwhile, private infrastructure appears to us to be almost purpose built to fulfill the promise of real assets. It has the potential to provide investors with steady, inflation-linked revenue that is largely insulated from prevailing market, economic, or interest rate trends.

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Conclusion

Our data strongly suggests that infrastructure can enhance risk‑adjusted returns, dampen volatility, provide durable income across market cycles, and optimize absolute growth in assets. Importantly, the way investors access infrastructure – through primaries, secondaries, and direct co‑investments – plays a critical role in shaping cash‑flow profiles, downside protection, and portfolio resilience.

For LPs, partnering with an experienced platform that can underwrite across strategies, structures, and cycles – and integrate those elements into a cohesive whole – can be the difference between simply holding infrastructure and harnessing its full potential. Done well, infrastructure is not just a stabilizing force within private markets, but has the potential to be a long-term engine for resilient, compounding returns.

Footnotes
  1. Source: Preqin and proprietary HarbourVest analysis as of September 30, 2025. Includes Private Equity, Private Debt, Real Estate, Infrastructure, and Natural Resources. Past performance is not a reliable indicator of future results. Not representative of any HarbourVest fund, account, and not representative of any HarbourVest experience.
Disclosure

HarbourVest Partners, LLC is a registered investment adviser under the Investment Advisers Act of 1940. This material is solely for informational purposes and should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy.  The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication, are not definitive investment advice, and should not be relied upon as such. This material has been developed internally and/or obtained from sources believed to be reliable; however, HarbourVest does not guarantee the accuracy, adequacy or completeness of such information. There is no assurance that any events or projections will occur, and outcomes may be significantly different than the opinions shown here.  This information, including any projections concerning financial market performance, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of HarbourVest.

Nothing herein should be construed as a solicitation, offer, recommendation, representation of suitability, legal advice, tax advice, or endorsement of any security or investment and should not be relied upon by you in evaluating the merits of investing in HarbourVest funds or in any other investment decision.

 

Infrastructure Strategy Risks. Investments in infrastructure and real assets entail certain specific risks, including fluctuations of commodity prices, uncertainty of reserves, exploration and development risks, uncertainty in the developing alternative energy markets and technology, and governmental support and regulations. Infrastructure strategies may be exposed to substantial risk of loss from environmental claims arising in respect of its investments. Furthermore, changes in environmental laws or regulations or the environmental condition of an investment could create liabilities that did not exist at the time of its acquisition and that could not have been foreseen. Investments in natural resources and energy services companies, including mining and oilfield service, product manufacturing, and technology businesses that are involved in the preparation, drilling, completion, production, and abandonment of oil and gas wells and mines could be subject to fluctuations in the demand for their services based on commodity prices, the macroeconomic environment, customer concentration, availability of alternative technologies or services and political or market pressures favoring these alternatives. Environmental groups could protest about the development or operation of infrastructure assets, which might induce government action to the detriment of the Fund.

 

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Professional Investor Definition

“Professional Investor” under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) and its subsidiary legislation) means:

(a) any recognised exchange company, recognised clearing house, recognised exchange controller or recognised investor compensation company, or any person authorised to provide automated trading services under section 95(2) of the SFO;

(b) any intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong;

(c) any authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(d) any insurer authorized under the Insurance Ordinance (Cap. 41 of the Laws of Hong Kong), or any other person carrying on insurance business and regulated under the law of any place outside Hong Kong;

(e) any scheme which-

(i) is a collective investment scheme authorised under section 104 of the SFO; or

(ii) is similarly constituted under the law of any place outside Hong Kong and, if it is regulated under the law of such place, is permitted to be operated under the law of such place,

or any person by whom any such scheme is operated;

(f) any registered scheme as defined in section 2(1) of the Mandatory Provident Fund Schemes Ordinance (Cap. 485 of the Laws of Hong Kong), or its constituent fund as defined in section 2 of the Mandatory Provident Fund Schemes (General) Regulation (Cap. 485A of the Laws of Hong Kong), or any person who, in relation to any such registered scheme, is an approved trustee or service provider as defined in section 2(1) of that Ordinance or who is an investment manager of any such registered scheme or constituent fund;

(g) any scheme which-

(i) is a registered scheme as defined in section 2(1) of the Occupational Retirement Schemes Ordinance (Cap. 426 of the Laws of Hong Kong); or

(ii) is an offshore scheme as defined in section 2(1) of that Ordinance and, if it is regulated under the law of the place in which it is domiciled, is permitted to be operated under the law of such place,

or any person who, in relation to any such scheme, is an administrator as defined in section 2(1) of that Ordinance;

(h) any government (other than a municipal government authority), any institution which performs the functions of a central bank, or any multilateral agency;

(i) except for the purposes of Schedule 5 to the SFO, any corporation which is-

(i) a wholly owned subsidiary of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(ii) a holding company which holds all the issued share capital of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong; or

(iii) any other wholly owned subsidiary of a holding company referred to in subparagraph (ii); or

(j) any person of a class which is prescribed by rules made under section 397 of the SFO for the purposes of this paragraph as within the meaning of this definition for the purposes of the provisions of the SFO, or to the extent that it is prescribed by rules so made as within the meaning of this definition for the purposes of any provision of the SFO.

The first of such classes of additional “professional investor”, under the Securities and Futures (Professional Investor) Rules (Cap. 571D of the Laws of Hong Kong), are:

(k) any trust corporation (registered under Part VIII of the Trustee Ordinance (Cap. 29 of the Laws of Hong Kong) or the equivalent overseas) having been entrusted under the trust or trusts of which it acts as a trustee with total assets of not less than HK$40 million or its equivalent in any foreign currency at the relevant date (see below) or-

(i) as stated in the most recent audited financial statement prepared-

(A) in respect of the trust corporation; and

(B) within 16 months before the relevant date;

(ii) as ascertained by referring to one or more audited financial statements, each being the most recent audited financial statement, prepared-

(A) in respect of the trust or any of the trust; and

(B) within 16 months before the relevant date; or

(iii) as ascertained by referring to one or more custodian (see below) statements issued to the trust corporation-

(A) in respect of the trust or any of the trusts; and

(B) within 12 months before the relevant date;

(l) any individual, either alone or with any of his associates (the spouse or any child) on a joint account, having a portfolio (see below) of not less than HK$8 million or its equivalent in any foreign currency at the relevant date or-

(i) as stated in a certificate issued by an auditor or a certified public accountant of the individual within 12 months before the relevant date; or

(ii)  as ascertained by referring to one or more custodian statements issued to the individual (either alone or with the associate) within 12 months before the relevant date;

(m) any corporation or partnership having-

(i) a portfolio of not less than HK$8 million or its equivalent in any foreign currency; or

(ii) total assets of not less than HK$40 million or its equivalent in any foreign currency, at the relevant date, or as ascertained by referring to-

(iii) the most recent audited financial statement prepared-

(A) in respect of the corporation or partnership (as the case may be); and

(B) within 16 months before the relevant date; or

(iv) one or more custodian statements issued to the corporation or partnership (as the case may be) within 12 months before the relevant date; and

(n) any corporation the sole business of which is to hold investments and which at the relevant date is wholly owned by any one or more of the following persons-

(i) a trust corporation that falls within the description in paragraph (k);

(ii) an individual who, either alone or with any of his or her associates on a joint account, falls within the description in paragraph (k);

(iii) a corporation that falls within the description in paragraph (m);

(iv) a partnership that falls within the description in paragraph (m).

For the purposes of paragraphs (k) to (n) above:

  • “relevant date” means the date on which the advertisement, invitation or document (made in respect of securities or structured products or interests in any collective investment scheme, which is intended to be disposed of only to professional investors), is issued, or possessed for the purposes of issue;
  • “custodian” means (i) a corporation whose principal business is to act as a securities custodian, or (ii) an authorised financial institution under the Banking Ordinance (Cap. 155 of the Laws of Hong Kong); an overseas bank; a corporation licensed under the SFO; or an overseas financial intermediary, whose business includes acting as a custodian; and
  • “portfolio” means a portfolio comprising any of the following (i) securities; (ii) certificates of deposit issued by an authorised financial institution under the Banking Ordinance (Cap, 155 of the Laws of Hong Kong) or an overseas bank; and (iii) except for trust corporations, cash held by a custodian.

Institutional Investor / Accredited Investor Definition

An institutional investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(a) the Singapore Government;

(b) a statutory board as may be prescribed by regulations made under section 341 of the SFA, as prescribed in the Second Schedule of the Securities and Futures (Classes of Investors) Regulations 2018;

(c) an entity that is wholly and beneficially owned, whether directly or indirectly, by a central government of a country and whose principal activity is —

(i) to manage its own funds;

(ii) to manage the funds of the central government of that country (which may include the reserves of that central government and any pension or provident fund of that country); or

(iii) to manage the funds (which may include the reserves of that central government and any pension or provident fund of that country) of another entity that is wholly and beneficially owned, whether directly or indirectly, by the central government of that country;

(d) any entity —

(i) that is wholly and beneficially owned, whether directly or indirectly, by the central government of a country; and

(ii) whose funds are managed by an entity mentioned in sub‑paragraph (c);

(e) a bank that is licensed under the Banking Act 1970;

(f) a merchant bank that is licensed under the Banking Act 1970;

(g) a finance company that is licensed under the Finance Companies Act 1967;

(h) a company or co‑operative society that is licensed under the Insurance Act 1966 to carry on insurance business in Singapore;

(i) a company licensed under the Trust Companies Act 2005;

(j) a holder of a capital markets services licence;

(k) an approved exchange;

(l) a recognised market operator;

(m) an approved clearing house;

(n) a recognised clearing house;

(o) a licensed trade repository;

(p) a licensed foreign trade repository;

(q) an approved holding company;

(r) a Depository as defined in section 81SF of the SFA;

(s) a pension fund, or collective investment scheme, whether constituted in Singapore or elsewhere;

(t) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;

(u) a designated market‑maker as defined in paragraph 1 of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations;

(v) a headquarters company or Finance and Treasury Centre which carries on a class of business involving fund management, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43D(2)(a) or 43E(2)(a) of the Income Tax Act 1947;

(w) a person who undertakes fund management activity (whether in Singapore or elsewhere) on behalf of not more than 30 qualified investors;

(x) a Service Company (as defined in regulation 2 of the Insurance (Lloyd’s Asia Scheme) Regulations) which carries on business as an agent of a member of Lloyd’s;

(y) a corporation the entire share capital of which is owned by an institutional investor or by persons all of whom are institutional investors;

(z) a partnership (other than a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2005) in which each partner is an institutional investor.

An accredited investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(i)  an individual —

(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(B) whose financial assets (net of any related liabilities) exceed in value $1 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount, where “financial asset” means —

(BA) a deposit as defined in section 4B of the Banking Act 1970;

(BB) an investment product as defined in section 2(1) of the Financial Advisers Act 2001; or

(BC) any other asset as may be prescribed by regulations made under section 341; or

(C) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(ii)  a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —

(A) the most recent audited balance sheet of the corporation; or

(B) where the corporation is not required to prepare audited accounts regularly, a balance sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance sheet, which date must be within the preceding 12 months;

(iii) A trustee of a trust which all the beneficiaries are accredited investors; or

(iv) A trustee of a trust which the subject matter exceeds S$10 million; or

(v) An entity (other than a corporation) with net assets exceeding S$10 million (or its equivalent in a foreign currency) in value. “Entity” includes an unincorporated association, a partnership and the government of any state, but does not include a trust; or

(vi) A partnership (other than a limited liability partnership) in which every partner is an accredited investor; or

(vii) A corporation which the entire share capital is owned by one or more persons, all of whom are accredited investors.

Continuation solutions encompass a host of transaction types in which a GP secures interim liquidity and/or additional primary capital for their LPs in a strongly performing asset, or set of assets, that the GP will continue to own and control. Specifically, they include continuation funds, new funds created by GPs for the purpose of acquiring the asset(s) that continue to be managed by the same GP and capitalized by one or several secondary buyers, or equity recapitalizations involving a direct equity or structured equity investment into a portfolio company. These transactions can also include a parallel investment from the GP’s latest fund into that same pool of assets (a “cross-fund trade”).