LPs show heightened confidence in infrastructure amid record fundraising and evolving performance challenges

LPs’ appetite for infrastructure has strengthened markedly as the asset class closes out a year of record fundraising, according to the LP Perspectives 2026 Study. Almost half of the 103 limited partners surveyed said they expect to boost infrastructure allocations over the next 12 months, the highest level of optimism recorded in four years, and 46 percent reported being under‑allocated to the sector in 2026. According to the study, many investors also feel relatively free to make new commitments: 42 percent said existing undrawn commitments do not constrain them at all, and a further 31 percent said they were only slightly constrained.

Pension funds and other allocators described infrastructure as a growth area rather than a fully mature sleeve of private capital. “Compared with private equity, for a lot of investors infrastructure is a relatively newer allocation, so they’re building it up. With a more mature allocation, investment activity is a lot more dependent on getting money back, so a big part of your investment planning is that it’s been proportionately funded by distributions,” Jeppe Starup, head of private capital and real assets at Danish pension fund PenSam, told Infrastructure Investor last September.

That structural momentum is reinforced by multiple industry outlooks. Macquarie Asset Management’s 2026 Infrastructure Outlook finds private infrastructure delivered a 10.5 percent year‑on‑year return as of mid‑2025, outpacing its long‑run average and noting attractive entry valuations relative to listed markets. Blackstone’s 2026 Investment Perspectives points to a technology‑driven infrastructure supercycle, particularly AI‑related power demand and digitalisation, while DWS’s Infrastructure Strategic Outlook 2026 highlights easing inflation, supportive fiscal policy and a pivot toward digital, electrification and decarbonisation projects across major markets. J.P. Morgan’s 2026 alternative‑investments note adds that infrastructure yields have averaged around 6 percent recently, roughly two percentage points above the 10‑year Treasury, underlining the asset class’s role as a durable, inflation‑resilient income source.

Yet the upbeat sentiment is tempered by emerging performance questions. An inaugural quarterly fund performance report from PEI Group finds that more recent infrastructure fund vintages are returning capital more slowly than older cohorts. By year five the top‑performing 2013–2015 vintage cohort had achieved a 0.32x DPI; comparable figures for 2016–2018, 2019 and 2020 cohorts were 0.23x, 0.17x and 0.11x respectively. The analysis also documents a widening dispersion of IRRs: median IRRs between 2014 and 2021 sat in a 7–12 percent band with modest top‑to‑bottom gaps, but in 2022 the interquartile spread broadened to 13 percentage points and in 2023 expanded further to 24 points, with top‑quartile funds returning 14 percent and bottom‑quartile funds delivering -10 percent.

Those trends help explain why, despite 78 percent of LPs saying infrastructure met or exceeded expectations over the past year, the share reporting underperformance, 22 percent, was at its highest in four years. Industry figures warn that strategy drift and higher‑risk dealmaking could erode some of infrastructure’s traditional defensive characteristics. “Sure, infrastructure has beaten global equities for 20 years. And it gives you diversification, inflation protection and yield. But what are people doing 1771013537? They’re basically trying to do private equity deals with infrastructure capital,” a head of infrastructure at a well‑known blue‑chip manager told Infrastructure Investor.

The concern is not merely academic. Private infrastructure remains a relatively young asset class in institutional terms, and many first‑time or newer funds are only now reaching maturity. High dispersion in returns makes manager selection, diligenced underwriting and active asset management more important than ever for investors seeking consistent outcomes.

For allocators, the interplay of robust demand, structural drivers and uneven fund performance frames a clear set of priorities. Industry research emphasises the long‑term drivers of returns, earnings growth and income underpinned by digitalisation, electrification and the energy transition, while also pointing to evolving fund structures that respond to investor needs for liquidity, diversification and downside protection. Asset managers and LPs alike are retooling strategies to capture growth in data centres, power generation and grid modernisation without sacrificing the cashflow and risk‑mitigation features that first attracted institutional capital.

As fundraising and dealmaking proceed apace, the proof will be in sustained, repeatable returns rather than headline deployment figures. Infrastructure’s long narrative of steady, inflation‑hedged performance has attracted a broader set of investors; preserving that story demands careful stewardship of strategy, disciplined underwriting and continued focus on income generation. Industry events this year will test whether the sector can convert prevailing optimism into durable outcomes for the wide cohort of institutions still building their allocations.