Institutional investors are doubling down on infrastructure allocations despite intensifying geopolitical headwinds, according to the newly released 2025 Institutional Infrastructure Allocations Monitor by Hodes Weill & Associates and Cornell University’s Program in Infrastructure Policy. 

The study, now in its third year, shows that target allocations climbed to an average of 5.9% of total portfolios — a 40-basis-point rise from last year — signaling sustained conviction that core, core-plus, and value-add infrastructure remains a powerful anchor in volatile markets. This uptick implies the potential for an additional $43 billion in capital deployment from survey participants alone. 

Why This Matters for Institutional Portfolios 

This continued growth reinforces the narrative that infrastructure is solidifying its position as an all-weather asset class, providing durable, inflation-protected cash flows that help smooth portfolio returns during macro uncertainty. Last year’s average performance rebound to 9.6% — beating many other private asset classes — is driving institutions to close the gap between actual and target allocations, now just 100 basis points apart versus 120 a year ago. 

Notably, the rebound follows a period when investors slowed capital calls and saw limited distributions, a dynamic that has kept dry powder levels relatively stable but also constrained net deployment. 

“The [Big, Beautiful] bill will catalyze significant investment activity across infrastructure-linked sectors,” noted Michael Underhill, CIO Capital Innovations and Connect Money Advisory Board member. “Most notably, the inclusion of accelerated depreciation allowances creates a near-term incentive for corporations to move forward with capital investment in facilities and equipment.” 

“As this provision is retroactive to January, we expect a resurgence in project initiations by Q4, driven by improved tax clarity and the resolution of tariff-related hesitations. This dynamic is particularly constructive for our real asset investment theses, especially in segments exposed to industrial development, energy infrastructure, and logistics,” Underhill added. 

Yet the bullish outlook comes with a clear caution flag: 41% of respondents now cite geopolitical risk as their top concern, overtaking interest rate volatility and asset valuations for the first time. This shift reflects mounting anxiety about global election cycles, tariff uncertainty — particularly in the U.S. — and the policy durability of programs like the Inflation Reduction Act. As a result, more LPs are prioritizing markets and subsectors with visible policy support and stable fundamentals. 

Matt Hershey, Partner at Hodes Weill, said, “The survey was conducted amid a rapidly evolving geopolitical landscape. Notably, institutions are expressing a high level of concern about geopolitical volatility and its impact on investment objectives and intentions. Despite this, conviction remains positive, with continued confidence in infrastructure’s ability to deliver reliable, inflation-protected returns – reinforcing its role as a strategic portfolio allocation.” 

Thematic and Regional Positioning Tells the Story 

Digital infrastructure, transportation, and energy assets remain the dominant subsectors for new capital. Investors favor high-demand areas like data centers, fiber networks, and battery storage, all of which benefit from secular tailwinds like AI adoption and energy transition mandates. 

“Global stability in energy markets remains a cornerstone for our infrastructure exposure,” Underhill said. “Our energy infrastructure positioning reflects a base-case assumption of oil price anchoring, encouraging stable dividend flows from pipelines, storage, and integrated midstream assets.” 

“Further, incremental trade agreements—recently secured or nearing finalization with Vietnam, India, and potentially South Korea—signal improving global cooperation and supply chain diversification. These developments are supportive of infrastructure resilience and nearshoring themes already embedded across our portfolios.” 

However, the report also highlights a strategic retrenchment: more institutions are doubling down on familiar markets rather than seeking first-time exposure in new or riskier regions. Canadian and European investors, for example, have notably pulled back from the U.S., citing concerns about shifting tariff policy. 

The preference for core-plus and value-add strategies also signals that many investors want an enhanced yield buffer against the longer-for-higher rate backdrop. Meanwhile, infrastructure debt — especially in EMEA — is gaining traction as a yield-oriented, downside-protected allocation, adding a layer of stability while equity markets remain uncertain. 

Implications for Investors and Managers 

For asset managers, these trends mean deal flow will likely stay concentrated in sectors with policy tailwinds and long-duration income. Competition for digital and energy transition assets could compress risk-adjusted returns, pushing some investors to consider direct deals and separate accounts to retain more control. 

On the ESG front, the report suggests an evolving landscape: although ESG integration remains important, the sharp drop in institutions rating it “extremely important” points to growing polarization, especially in the U.S., where it has become more politicized. 

Overall, the message is clear: infrastructure’s role as a portfolio stabilizer is only getting stronger — but how and where capital is deployed is evolving rapidly under the weight of macro and geopolitical crosscurrents. Investors leaning into high-conviction, resilient sectors while tightening focus on geographic and policy risks will likely be best positioned to capture the next wave of returns. 

A total of 115 institutions from 25 countries participated in the survey, representing aggregate AUM exceeding $10.6 trillion and portfolio investments in infrastructure totaling approximately $520 billion.