States Turning to Private Infrastructure Investments | Money Online Now |

At a time when states and municipalities face more than $2 trillion of unfunded pension fund liabilities, states are increasingly turning to private infrastructure investments to help close those funding gaps, an investment banker told treasurers meeting here this week.


All institutional investors in North America — including public pension plans, endowments, sovereign wealth funds and foundations — are expected to increase their investment allocations for infrastructure by 32%, to 5.7% from 4.3% of their portfolios over the next two to three years, said Mark Weisdorf, chief executive and managing director of global real assets infrastructure investments at JPMorgan Asset Management.


In the next decade, real assets will move from an alternative to a mainstream asset class, according to Weisdorf. JPMorgan forecasts that over the next 10 years U.S. pension plans will increase their investment allocations for infrastructure to between 5% and 10% of their portfolios on average, he said.


Real assets are characterized typically by investments in tangible “hard” assets that offer stable income, equity-like upside potential, inflation hedging and lower volatility, he said. Real estate, infrastructure, shipping, commodities, timber, farmland and natural resources can be classified as real assets.

Via Sam Radcliffe