Private Infrastructure Moves from Niche Diversifier to Core Allocation
Private infrastructure has quietly become one of the most sought-after allocations in the private wealth market, evolving from a defensive diversifier into a core growth-oriented position, according to findings from I Squared Capital’s inaugural ISQ OpenInfra Index, a survey of 250 financial advisors working in alternative investments conducted in April 2026.
Nearly half (47%) of advisors surveyed said clients currently allocate between 6% and 10% of their private markets assets under management to infrastructure. A commanding 75% expect those allocations to increase by 2027, and an equal share say they prefer working with specialized infrastructure managers to build that exposure.
The shift reflects a fundamental reframing of how advisors position the asset class. Infrastructure is no longer viewed primarily as a defensive or income-generating allocation. Today, advisors most commonly identify it as a growth driver — 35% cite capital appreciation as infrastructure’s primary portfolio role, ahead of diversification at 32% and income generation at 17%.
“We were encouraged to see that advisors now most commonly view private infrastructure as a growth allocation,” Irina Zilbergleyt, Global Head of Distribution and Product Strategy for OpenInfra at I Squared Capital, told Connect Money. “Long-term themes like digitization, electrification and rising energy demand are helping reposition infrastructure as a long-term capital appreciation story, not simply a defensive and yield-generating allocation,” she said.
AI, Data Centers Fuel Demand Surge
Digital infrastructure is leading the charge. More than a third (36%) of advisors identified it as the sector generating the most client interest, driven by the explosive growth of data centers, connectivity infrastructure and AI adoption. Half of all respondents cited the growth of digital infrastructure, including data centers and artificial intelligence, as a top trend driving client interest, followed by long-term structural themes such as population growth, urbanization and reshoring at 44%, and inflation alongside broader macroeconomic uncertainty at 41%.
Zilbergleyt cautioned, however, that the opportunity extends well beyond headline digital assets. “AI is creating ripple effects across the broader infrastructure ecosystem. The infrastructure required to support that growth — particularly across power generation, grid modernization and energy systems — may become just as important as the data centers and connectivity assets themselves,” she said. “Advisors are increasingly seeking out managers that can identify opportunities across the full infrastructure landscape, not just the headline sectors.”
The risk of over-concentration in digital assets is real, she added. “Infrastructure is a much broader asset class than many investors realize. We believe that is where specialist managers can play an important role — understanding how different sectors interact, where long-term demand is developing, and how to build diversified exposure across the asset class.”
Barriers to Entry Persist
Despite rising interest, barriers remain. Liquidity concerns and limited product availability each were cited by 48% of advisors as obstacles to increased allocation, while policy or regulatory uncertainty and limited understanding of the asset class were each flagged by 44%.
I Squared launched its ISQ OpenInfra platform to help address those gaps, providing financial advisors and their clients with access to diversified, institutional-quality middle market infrastructure investments across power and utilities, transportation and logistics, and digital, environmental and social infrastructure.
“While advisors and their clients are increasingly interested in and allocating to private infrastructure, many are still looking for greater education, access and guidance,” Zilbergleyt said. “We believe managers have an important responsibility to help advisors look beyond the headline themes and understand the broader infrastructure ecosystem driving long-term growth.”
Pictured: Irina Zilbergleyt