Infrastructure & the inflation gap: a fifteen-year view
A research note on how contracted, inflation-linked infrastructure has actually performed since 2010 — and what that tells us about the next fifteen years.
Summary
The investment case for infrastructure has been made on one promise for two decades: contracted cash flows, with inflation linkage, will deliver real returns across regimes. After 2022, that promise was finally tested.
This note looks back across the 2010-2025 window and asks: did infrastructure actually deliver on its claim? The answer is a qualified yes — but the qualification matters.
The setup
We classified roughly 1,400 OECD-listed and unlisted infrastructure assets across six sub-sectors: regulated utilities, contracted renewables, transport (toll roads, ports, rail), digital (towers, fibre, data centres), midstream energy, and water. We tracked nominal cash distributions, expense growth, and the share of revenue that was explicitly indexed to a published inflation measure.
Two periods stand out.
2010-2021: the easy era
Inflation ran below central bank targets for most of the decade. Inflation linkage was a theoretical feature, not a binding constraint. Returns came from declining discount rates and growth — not from CPI escalators.
In this regime, all infrastructure looked alike. Returns were respectable. Cash yields were stable. The dispersion across sub-sectors was modest.
2022-2025: the test
When U.S. CPI peaked at 9.1% in June 2022, the inflation-linkage claim was no longer theoretical. We tracked how each sub-sector's cash distributions behaved through 2025.
The dispersion was striking.
- Regulated utilities, with formula-based rate cases tied to a regulator's view of "allowed return," lagged by 18-24 months. Real distributions fell, then recovered.
- Contracted renewables, with PPA prices indexed to a fixed escalator (typically 2-3%), simply could not keep up.
- Toll roads with CPI-linked toll formulas delivered as advertised — distributions tracked CPI within a quarter.
- Digital infrastructure, with shorter contract durations and embedded re-pricing power, materially over-delivered.
- Midstream energy outperformed on commodity strength, not on contracted linkage.
- Water, where most rate structures are political, lagged most.
What we conclude
"Infrastructure" as a single asset class doesn't exist. It is a collection of cash-flow structures sold under one label.
For families allocating to the asset class with multi-decade horizons, the question is not whether to own infrastructure. It is which contract structures you own — and how explicitly you have priced their behaviour under regimes that don't look like 2010-2021.
What we are doing differently
Our current infrastructure allocation tilts toward:
- Explicit CPI-linked contract structures — read the indenture, not the marketing deck
- Shorter contract re-pricing windows — five-year resets beat twenty-five-year fixed escalators
- Digital infrastructure with growth optionality — even where the contract is not explicitly indexed
- Avoidance of long-dated fixed-escalator renewables — until they are repriced
The fifteen years behind us were generous to anyone who owned the label. The fifteen years ahead will reward those who own the structure.