September 2026
The world is working differently. We believe that a significant transition is underway, and under the surface the dynamics that govern growth, inflation, and correlations are changing in ways not seen in decades. Inflation is no longer a temporary disruption to wait out; it is a defining structural force reshaping every portfolio. Investors who recognize its effects may be better positioned to protect, adapt, and achieve their desired outcomes.
Why does inflation matter for global infrastructure investors?
For global infrastructure, inflation can be more of an opportunity than an obstacle, and the reason is structural. Infrastructure companies are tied to essential services and long-lived assets: the grids, pipelines, ports, towers, and utilities that economies cannot switch off. They offer a combination of characteristics that much of the market lacks: the potential for yield, capital appreciation, diversification, and inflation protection through an inflation linkage—the ability to adjust prices in line with inflation. When prices rise, many of these businesses can pass costs through to consumers via regulated returns, contracted revenues, or index-linked pricing. The result can be cash flows that tend to hold up, and can even benefit, when inflation runs hot.
This matters because the inflation backdrop is creating an opening for assets that can grow their income alongside higher prices. In our view, inflation is likely to remain sticky, or persistent, even if geopolitical tensions ease, and central banks are likely to keep interest rates higher for longer amid ongoing price pressures. Strong nominal growth and continued inflationary pressure suggest interest rates are likely to remain elevated.1 Under those conditions, assets that can generate income capable of keeping pace with prices become scarce and valuable, and infrastructure appears structurally well suited to that environment.
How does the strategy help navigate an inflationary world?
Global infrastructure helps investors navigate inflation by offering a different mix of underlying return drivers than traditional equity allocations. This mix includes durable cash flows, essential-service demand, and the ability to participate in equity market returns while carrying lower sensitivity to the forces that can challenge conventional bonds and growth stocks. It has historically exhibited relatively low correlation to many traditional equity exposures, including some of the most concentrated areas of market leadership.2,3 It has also shown a negative correlation with the Magnificent Seven on a trailing one-year basis, based on weekly returns as of June 30, 2026.4,5 In a portfolio, that means infrastructure may serve as a useful complement rather than simply another source of broad market exposure.
Where do the risks, opportunities, and conviction lie?
Our conviction is grounded in a broadening opportunity set. Infrastructure investment is projected to grow at an 11.1% compound annual rate through 2028,6 supported by fiscal policy across the U.S., Europe, and Asia. We believe the asset class is at an inflection point, driven by rising power demand from artificial intelligence (AI) and electrification, a renewed focus on supply-chain resilience and energy independence, and the need to modernize aging infrastructure.
Governments are increasing stimulus, accelerating permitting, and launching co-investment vehicles to attract private capital, while reshoring and near-shoring are driving demand for industrial corridors, logistics hubs, ports, and power infrastructure. In this environment, we continue to view infrastructure favorably for real-asset exposure and portfolio diversification. Expanding beyond traditional infrastructure to include selected non-traditional and social infrastructure businesses broadens the investible universe and enhances opportunities for differentiated security selection.
In our view, that broader universe is a key advantage. Senior housing is one area of differentiation and has contributed positively to year-to-date relative results.7 More broadly, the strategy can evaluate more than 400 companies, versus roughly 75 to 80 in the benchmark, creating greater flexibility to identify relative value and income opportunities.8
The opportunity set is also expanding. Demand for data center capacity could more than triple by 2030, and data centers could consume up to 12% of total U.S. electricity by 2028, up from 4.4% in 2023.9 This is fueling investment across the energy supply chain and in adjacent areas such as utilities, grid infrastructure, network solutions, and specialized services. With global infrastructure needs through 2040 estimated at $106 trillion,10 we see growing relevance in sectors that help build, operate, and maintain essential systems, including senior housing.
Infrastructure companies may be less economically sensitive than many other equities, but they are not without risk. In a higher-rate environment, the greatest vulnerabilities are likely to be in businesses that cannot pass through rising costs or that rely on excessive leverage. Geopolitical developments may also pressure certain subsectors—airports, for example, have been negatively affected in 2026.11 In our view, that underscores the value of active security selection, disciplined portfolio construction, and a focus on sustainable cash flows.
If inflation remains persistent, investors may increasingly turn to real assets with the potential to grow cash flows over time. We believe global infrastructure remains a compelling way to express that view.
Endnotes
1. Source: BNY Investments Strategy & Research Group as of June 17, 2026.
2. Source: BNY Investments Strategy & Research Group, Macrobond.
3. Global Infrastructure: The S&P Global Infrastructure Index is designed to track 75 companies from around the world chosen to represent the listed
infrastructure industry while maintaining liquidity and tradability.
4. “The Magnificent Seven” refers to seven large U.S. technology-focused companies that have had an outsized influence on stock market performance because
of their size, growth, and investor popularity.
5. Source: BNY Investments Strategy & Research Group, Macrobond.
6. Source: Boston Consulting Group (BCG). Data as of December 31, 2025.
7. Source: BNY Investments Newton. Benchmark: S&P Global Infrastructure ETF (GII U.S. Equity). Data as of September 1, 2026.
8. Source: BNY Investments Newton. The strategy’s investible universe is broader than the benchmark, providing greater flexibility to identify relative value and
income opportunities. Benchmark: S&P Global Infrastructure ETF (GII U.S. Equity). Year-to-date as of September 1, 2026.
9. Source: 2024 United States Data Center Energy Usage Report, Lawrence Berkely National Laboratory, December 2024.
10. Source: McKinsey & Company, “The infrastructure moment,” September 9, 2025.
11. Source: BNY Investments Newton. Benchmark: S&P Global Infrastructure ETF (GII U.S. Equity). Year-to-date as of September 1, 2026.
Important information
All investments involve risk including loss of principal. Certain investments involve greater or unique risks that should be considered along with the objectives, fees, and expenses before investing. Past performance is not necessarily indicative of future results.
Risks
Equities are subject to market, market sector, market liquidity, issuer, and investment style risks to varying degrees. Companies that are engaged in the infrastructure business are more susceptible to adverse economic, regulatory, political, legal and other changes affecting such companies. Infrastructure companies are subject to a variety of factors that may adversely affect their business or operations, including high interest costs in connection with capital construction programs, costs associated with environmental and other regulations, difficulty in raising capital in adequate amounts on reasonable terms in periods of high inflation or unsettled capital markets, the effects of economic slowdown and surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies, service interruption due to environmental, operational or other mishaps, and other factors.
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