United StatesInflation may no longer be at the heights seen a few years ago, but it has not disappeared from daily life. For some investors, rising energy prices have renewed concerns about a potential return to a 2022-style inflation shock. At the same time, consumers continue to feel the lingering effects of higher costs across everyday essentials.
As a result, inflation remains a central part of portfolio conversations with clients. Increasingly, those discussions are becoming less about finding a single “inflation hedge,” like gold or commodities, and more about understanding which parts of a portfolio are connected to real-world costs, assets, and pricing dynamics.
Infrastructure sits directly in that conversation.
Global electricity demand from data centres alone is projected to more than double to roughly 945 terawatt hours by 2030, driven in part by artificial intelligence and cloud computing. Meeting that demand is expected to require sustained investment in power generation, grid capacity, and related infrastructure.
For investors, this connects inflation not only to macroeconomic conditions, but also to the rising cost of building, maintaining, and upgrading the systems economies rely on every day.
Why listed infrastructure may behave differently
Infrastructure provides essential services – power, water, transportation, connectivity – that continue to be used regardless of short-term economic cycles.
In many cases, they operate within regulated or contractual frameworks that influence how revenues are set and adjusted over time. That does not eliminate risk. These companies remain exposed to interest rates, regulations, and market conditions.
In practice, revenues are shaped by:
- Usage of essential systems: Electricity flows across networks, rail lines, and water utilities.
- Ongoing capital investment: Expand capacity, improve reliability or modernise assets.
- Regulated or contractual frameworks: Which can influence how tariffs and prices adjust to changes in demand and costs, subject to policy and contract terms.
These features may not remove risks: infrastructure remains equity, with exposure to interest rates, regulations, and political decisions. They could, however, create a return profile that can differ from more cyclical sectors.
From “defensive” to “linked to real costs”
Infrastructure has often been framed as a “defensive” or “income” allocation, and those characteristics remain relevant. What is changing is the scale and direction of underlying investment in the multi-year build-out of assets such as grids, renewable generation, water systems, and data infrastructure.
Income, with a different foundation
Income is another reason infrastructure is part of the conversation. Many listed infrastructure companies generate cash flows tied to ongoing demand for essential services. The key distinction is where that income is anchored.
There are no guarantees, but within an equity allocation, infrastructure related income may be grounded in a different set of drivers than broad market dividends. For example, the cash flows generated by a utility are typically underpinned by a regulated asset base, rather than a large pharmaceutical company which may rely on unpredictable drug discoveries. This can be useful when thinking about diversification by source of cash flow rather than headline yield alone.
The Impax Global Sustainable Infrastructure ETF (ticker: BLDX) provides exposure to a global portfolio of listed infrastructure companies, including utilities, networks, and other essential systems.
These businesses operate in areas where demand is tied to long-term economic activity and where revenues may be influenced by regulated or contractual frameworks.
Within a broader allocation, that type of exposure can be considered as part of how portfolios reflect real assets, income and the infrastructure systems that underpin the global economy.
The focus is shifting toward how different exposures behave when costs rise, demand persists and investment cycles extend.
Infrastructure is part of that shift. Not because it provides a simple answer, but because it sits where inflation is most visible, within the systems that economies rely on every day.
Learn more about BLDX: BLDX ETF | Impax Global Sustainable Infrastructure ETF
References:
– International Energy Agency, Energy and AI. https://www.iea.org/reports/energy-and-ai
– International Energy Agency, Electricity 2025: Analysis and Forecast to 2026. https://www.iea.org/reports/electricity-2025
– International Energy Agency, Global electricity demand is set to grow strongly to 2030, underscoring need for investments in grids and flexibility.
https://www.iea.org/news/global-electricity-demand-is-set-to-grow-strongly-to-2030-underscoring-need-for-investments-in-grids-and-flexibility
– U.S. Energy Information Administration, Short-Term Energy Outlook. https://www.eia.gov/outlooks/steo/
Important Information:
Impax funds are distributed by Foreside Financial Services, LLC. Foreside Financial Services, LLC is not affiliated with Impax Asset Management LLC.
You should always consider Impax funds’ investment objectives, risks, and charges and expenses carefully before investing. For this and other important information, please obtain a fund prospectus by calling 800.767.1729 or visiting www.impaxam.com. Please read the prospectus carefully before investing.
Diversification cannot assure a profit or protect against loss in a down market.
Risks – Investing involves risk. Principal loss is possible. Non-US securities may have less liquidity and more volatile prices than domestic securities, which can make it difficult for the Fund to sell such securities at desired times or prices. Investments in emerging markets are likely to have greater exposure to the risks associated with investments in non-US securities generally. The values of growth securities may be more sensitive to changes in current or expected earnings than the values of other securities. Value securities are securities the investment adviser believes are selling at a price lower than their true value, perhaps due to adverse business developments or special risks. Investments in real estate investment trusts (REITs) and in securities of other companies principally engaged in the real estate industry subject a Fund to, among other things, risks similar to those of direct investments in real estate and the real estate industry in general.
ETFs are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF’s shares may trade at a premium or discount to its net asset value, an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact an ETF’s ability to sell its shares. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. Brokerage commissions will reduce returns.
Impax is a trademark of Impax Asset Management Group Plc. Impax is a registered trademark in the UK, EU, US, Hong Kong, Canada, Japan and Australia. © Impax Asset Management LLC, Impax Asset Management Limited and/or Impax Asset Management Ireland Limited. All rights reserved.