10% Infrastructure Allocation Cuts Inflation Sensitivity 18%
SS&C ALPS Advisors finds adding 10% global infrastructure to a 60/40 stock-bond mix improves inflation beta 18% with little change to returns; ALPS’s ELFY offers U.S. electricity-infrastructure exposure.
A May research report from SS&C ALPS Advisors modeled 10 years of index data to compare a standard 60% equities/40% bonds portfolio with versions that replace part of the bond sleeve with global infrastructure. Moving to a 55/35/10 split – adding 10% infrastructure – reduced the portfolio’s inflation beta by 18% while leaving annualized returns largely unchanged.
Inflation beta measures how much a portfolio’s returns move when consumer prices rise. The report found a 20% infrastructure allocation improved inflation beta by 44% and cut the portfolio’s maximum drawdown. A 30% weighting increased annualized returns by 75 basis points versus the 60/40 baseline and improved inflation beta by 86%.
Richard Baker, director of research for real assets and alternatives at SS&C ALPS Advisors, wrote, “With inflation back on investors’ radar, bonds are struggling to play their traditional cushioning role.” The report notes physical infrastructure such as power plants, transmission grids and pipelines tend to have long economic lives, contracted revenue streams and regulatory or contractual protections that can support cash flow when input costs rise.
SS&C cited a PwC estimate that the world will need about $151.1 trillion in infrastructure investment between 2025 and 2050, including a projected 121% increase in power spending. The firm also cited data showing global infrastructure fundraising reached nearly $200 billion in 2025, a record high.
For investors seeking exposure to electricity infrastructure, the ALPS Electrification Infrastructure ETF (ELFY) launched in April 2025. The ETF targets U.S. companies tied to rising electricity demand from artificial intelligence, electric vehicles, reshoring of manufacturing and grid modernization. ELFY carries a 0.50% expense ratio, had gathered $191.7 million in assets and returned 21.18% year-to-date, according to ETF Database data cited by SS&C. The fund’s largest holdings listed were Sterling Infrastructure, Inc. at 1.55% of assets and Bloom Energy Corp. at 1.43%, and utilities made up 36.77% of the portfolio as of March 31.
VettaFi LLC is the index provider for ELFY and receives an index licensing fee. VettaFi is not the issuer, sponsor or seller of ELFY and has no obligation or liability in connection with the fund’s issuance, administration, marketing or trading.
