Infrastructure investing has evolved beyond roads, bridges, and utilities.

According to Harry Boyle, Portfolio Manager at Impax Asset Management, the modern infrastructure opportunity now spans everything from digital communications and electric vehicle charging networks to water systems, healthcare facilities, and the electrical grid itself.

Speaking on The ETF Show, Boyle discussed the Impax Global Sustainable Infrastructure ETF (BLDX) — recently converted from the firm’s mutual fund. He explained how infrastructure has evolved alongside changes in the global economy.

"I think the definition has evolved," Boyle said. "It's no longer just about toll roads and bridges."

For Impax, five major themes are driving long-term infrastructure investment opportunities: electricity transmission, electricity generation, digital communications, social infrastructure, and water efficiency. Boyle noted that these are not short-term investment trends.

"Those are five enormous themes that don't get solved in five-year horizons, they get solved in 25-year horizon space," he said.

Artificial intelligence is increasingly becoming a major catalyst behind many of those investments.

While investors often focus on chipmakers and hyperscalers, Boyle believes some of the most compelling opportunities exist deeper within the infrastructure ecosystem. As AI adoption accelerates, demand for power, water, cooling systems, transmission networks, and grid upgrades is rising rapidly.

"The big constraint around building out these data centers and continuing to move forward with this technology is the power going into the data center, but also the water supply," Boyle said.

He pointed to companies providing cooling technologies, water-efficiency solutions, and electrical equipment such as substations, transmission systems, and grid infrastructure as potential beneficiaries of the AI buildout.

"It's very boring,” Boyle said. “It's wires, it's poles, it's substations. Very, very important. Big opportunity,” he added.

At the same time, Impax views infrastructure through the lens of decarbonization rather than traditional ESG investing.

"I would say ESG has never been what we do," Boyle said. Instead, the firm's focus is on identifying profitable businesses helping move the economy toward lower carbon emissions over time.

Boyle argues that the investment case increasingly stands on its own, regardless of policy support.

"I think it's now an extremely exciting moment whereby these stocks or these companies start to divorce themselves from the policy," he said. "The system without policy support is essentially decarbonizing now."

For portfolio construction, Boyle sees infrastructure as a blend of growth and defense. Many infrastructure businesses generate stable cash flows, offer dividend yields, and benefit from inflation-linked contracts. But selective exposure to faster-growing areas like AI provide additional upside.

"I'd like to see it as core," Boyle said when asked where infrastructure fits within a portfolio. "When asset allocators need to dial up defensiveness, allocate a bit more to us."

Looking decades ahead, Boyle believes investors may ultimately discover that some of the most attractive opportunities were hiding in plain sight.

"My inclination is always to go for the boring picks-and-shovels part," he said, pointing to the companies building and maintaining the electrical infrastructure that powers the modern economy. "They're great businesses, they're super profitable, and what they do will be in very high demand for a long time."

Source: The ETF Show - The Digital Backbone of Infrastructure: A New Opportunity Set for Investors