The Subsidy to Infrastructure as an Asset Class

74 Pages Posted: 24 Sep 2018 Last revised: 2 Mar 2020

See all articles by Aleksandar Andonov

Aleksandar Andonov

University of Amsterdam

Roman Kräussl

Luxembourg School of Finance; Hoover Institution, Stanford University

Joshua D. Rauh

Stanford Graduate School of Business; Hoover Institution; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2020


Institutional investors expect infrastructure assets to deliver long-term stable returns, but they gain exposure to infrastructure predominantly through closed, finite-horizon private funds. The cash flows delivered by infrastructure funds display similar volatility and cyclicality to those of other private equity funds. Their performance depends primarily on deal exits. Public investors, such as public pension funds and sovereign wealth funds, perform worse than private investors, despite being exposed to underlying deals with similar characteristics. By selecting underperforming funds and increasing their commitments, public investors have created an implicit subsidy of over $2 billion per year to infrastructure as an asset class.

Keywords: Infrastructure, Public Pension Funds, Institutional Investors

JEL Classification: G11, G23, G28, H54, H75

Suggested Citation

Andonov, Aleksandar and Kraeussl, Roman and Rauh, Joshua D., The Subsidy to Infrastructure as an Asset Class (February 2020). Stanford University Graduate School of Business Research Paper No. 18-42, Available at SSRN: or

Aleksandar Andonov

University of Amsterdam ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV


Roman Kraeussl

Luxembourg School of Finance ( email )

4, rue Albert Borschette
Luxembourg, 1246
+3524666445442 (Phone)


Hoover Institution, Stanford University ( email )

Stanford, CA 94305
United States

Joshua D. Rauh (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Hoover Institution ( email )

Stanford, CA 94305-6010
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics