Weisdorf: Infrastructure will be as big as real estate

The managing director and chief executive of JPMorgan Asset Management’s Infrastructure Investments Group says he believes infrastructure is the ‘Holy Grail’ for institutional investors and could represent as large a slice of investor portfolios as real estate within 10 to 15 years.

Mark Weisdorf, head of the Infrastructure Investments Group at JPMorgan Asset Management in New York, spoke of his enormous optimism for the future of infrastructure as an asset class in a keynote interview for the October 2011 issue of Infrastructure Investor.

Weisdorf, whose prior career roles included devising the Canada Pension Plan Investment Board’s private markets strategy, said infrastructure was the “Holy Grail for institutional investors”. He explained: “Institutions thought they only had equities and fixed income for low correlation of returns to each other. Now they are beginning to appreciate they have infrastructure as well, and that means infrastructure should become a very large part of institutional portfolios.”

Indeed, he believes that in the US and Europe – where allocations to infrastructure have lagged behind those typical of Canada and Australia – the gap with real estate allocations may be closed within the next 10 to 15 years “given the compelling risk and return characteristics of infrastructure for institutional investors, the search by institutional investors for alternative investments that meet their risk-adjusted return requirements, and the tremendous need for private sector capital”.

In the interview, he also expressed the view that open-ended funds work best for core, strategic infrastructure assets. Of the pressure to exit that comes with closed-end funds, he said: “It’s always puzzled me why you would sell assets if they match your liabilities. How do you find a different investment that serves you better?”

Weisdorf joined JPMorgan Asset Management six years ago, at which point it managed over $1 trillion of client capital but had zero exposure to infrastructure. Client commitments to the asset class have since risen to over $4.5 billion.

For the full version of the interview, please click on the link 'The Quest for the Holy Grail' (above right).