Over the past 10 years the global infrastructure and utilities sector has outperformed equities and government bonds, reports UBS. The says it sees continued growth in the sector.

The bank says that its research suggests this developing asset class will be among the biggest themes in financial markets over the next decade and beyond.

The UBS report concludes that outperformance of the I&U sector over the past decade has been driven by a secular decline in interest rates, coupled with a growing interest in what is a developing asset class. It states that underlying profitability has helped, as well as a major structural shift occurring in the sector.

The report argues that demand for infrastructure investment is likely to be driven by attractive forecast risk-adjusted returns, asset managers wanting to match long-term liabilities with stable long-term cash flows, and the ageing population looking for defensive, high-yielding investments to underwrite retirement incomes.

The supply of infrastructure investment will be driven by governments playing catch-up for historic under-spending and also meeting the needs of future population growth, it adds.

The report’s authors expect that a growing proportion of the capital to fund this will come from private sources as governments move away from public funding in order to focus health, education, welfare and defence spending.

The report suggests the ongoing globalisation and securitisation of the Infrastructure & Utilities sector will be one of the major trends in global capital markets over the next decade.