By Harrison Page, Director of Alternative Investments, Certuity
In recent years, private credit has become a cornerstone of private wealth portfolios. In a period marked by public market volatility and high interest rates, private credit has offered a rare combination of attractive yields, relatively low default rates, and perceived insulation from equity market swings.
Fund managers responded by creating a host of products tailored to private wealth investors, leading to record fundraising and rapid adoption. As of year-end 2024, private debt assets under management exceeded $2.2 trillion, including perpetual vehicles in the wealth and insurance channels.¹
While this momentum is expected to continue, early signs of stress are appearing.
In today’s uncertain environment, shaped by inflation concerns, tighter liquidity, and a potential turn in the credit cycle, investors are increasingly turning to core infrastructure for reliable yield and downside protection.
Growing Fractures in the Private Credit Landscape
Signs of stress have begun to emerge within the private credit market. Heightened competition has led to tighter pricing and more borrower-friendly terms, with managers under pressure to loosen financial covenants and forgo other protections to maintain deployment pace.
These dynamics are raising concerns among allocators, particularly in a macro environment where downside protection and liquidity are again top of mind. Many investors are now re-evaluating how to complement or diversify their exposure without sacrificing stability or income.
Core Infrastructure: Yield, Resilience, and Relevance
Core infrastructure offers a compelling solution. Like private credit, it emphasizes stability, downside protection, and income. The strategy focuses on fully operational, essential assets such as utilities, transportation networks, digital infrastructure, and power systems. These assets typically operate under long-term contracts or within regulated frameworks, providing highly visible cash flows over extended periods.
Core infrastructure has long been a cornerstone in institutional portfolios, particularly among pensions, insurance companies, and endowments. These investors rely on it for its predictable income, inflation resilience, and low correlation to traditional asset classes.2 These attributes are increasingly relevant to the private wealth audience as it navigates a shifting macroeconomic landscape and seeks to diversify sources of yield within private markets portfolios.
While yields may be modestly lower than opportunistic direct lending strategies, the tradeoff often comes with greater consistency, less credit volatility, and embedded inflation-linked revenue streams. For long-term investors seeking durable income and risk mitigation, core infrastructure presents a powerful complement, or alternative, to private credit.
Powerful Tailwinds: The Infrastructure Imperative
Several structural shifts are reinforcing the case for private infrastructure. The AI revolution is rapidly accelerating demand for digital infrastructure, including data centers, fiber-optic networks, and power systems for next-generation computing. At the same time, the global shift toward electrification is driving the need for renewable and conventional energy infrastructure, from solar and wind to battery storage and transmission.
Reshoring efforts, geopolitical realignments, and evolving global trade flows are also reshaping transportation and logistics networks. According to PitchBook, decarbonization, digitalization, and deglobalization remain the most prominent themes driving infrastructure capital formation.3 In Q1 2025, 98% of fundraising went to funds with some degree of exposure to energy transition infrastructure, while over 60% of capital raised was allocated to vehicles targeting digital infrastructure such as data centers and telecom.4 Transportation infrastructure also saw meaningful commitments.5
Notably, purchase agreements related to core infrastructure assets also tend to be structured with direct inflation linkage. Many infrastructure assets include physical property that is expected to maintain or increase in value during periods of inflation. Additionally, many infrastructure investments’ revenue streams have explicit inflation links under contract or concession schemes. Contracts may include price escalators, regulated tariffs, or consumer price index adjustments that help protect investor purchasing power.6 This inflation passthrough provides tangible income stability that is difficult to replicate elsewhere in private markets.
Repositioning Portfolios for the Road Ahead
For HNW advisors and investors, core infrastructure offers a natural next step in building durable portfolios. It delivers yield, capital preservation, and portfolio diversification, while bringing differentiated exposure tied to long-term secular growth themes and a risk-return profile that is often less sensitive to the credit cycle.
Importantly, core infrastructure has demonstrated resilience during major periods of market stress. It outperformed equities through the Global Financial Crisis, the COVID-19 drawdown, and the 2022 inflation shock, offering consistency when volatility spiked.7
Access has also improved. Infrastructure is no longer solely the domain of large institutions. Drawdown funds, evergreen vehicles, and semi-liquid products are increasingly available to private wealth investors.
The Next Generation of Durable Income
Private credit has cemented its place in modern portfolio construction. But for investors seeking similar outcomes with distinct risk drivers and long-term structural tailwinds, core infrastructure is an increasingly important part of the opportunity set. With reliable yield, low correlation, and embedded inflation protection, it stands out as a foundational asset class for the next chapter of private wealth investing.
Disclaimer: As with any investment, private credit and infrastructure strategies involve risk. These may include illiquidity, limited transparency, changes in interest rates or regulatory environments, and the potential for borrower or counterparty default. Past performance is not indicative of future results, and investors should conduct their own due diligence and consider their risk tolerance and investment objectives before making a commitment.
References
1: PitchBook, 2024 Annual Global Private Debt Report
2, 6, 7: Meketa Investment Group, Infrastructure Primer, 2022.
3 – 5: PitchBook, Q1 2025 Global Real Assets Report, April 2025.