The Case for Industrial and Infrastructure ETFs in a Post-Pandemic, Supply-Chain-Rebalanced World

The post-pandemic era has rewritten the rules of global investing. As supply chains reconfigure, geopolitical tensions reshape trade flows, and inflationary pressures persist, industrial and infrastructure ETFs have emerged as linchpins of resilient, long-term compounding. These sectors, driven by operational discipline, geopolitical tailwinds, and undervalued earnings potential, offer a compelling case for investors seeking stability amid volatility.

Operational Discipline: The Bedrock of Resilience

Industrial and infrastructure assets thrive on predictable cash flows and long-term contracts. Unlike cyclical equities, which are vulnerable to economic swings, infrastructure operators—such as utilities, toll roads, and energy providers—benefit from inelastic demand. For example, the FTSE Developed Core Infrastructure 50/50 Index, tracked by the iShares Core FTSE Global Infrastructure ETF (GLIN), delivered a 6.7% return in the six months to June 2025, outperforming the S&P 500's 0.14% and the S&P Global 100's 1.78%. This resilience stems from infrastructure's ability to lock in revenue through CPI-adjusted contracts, which shield operators from inflation while ensuring steady returns.

Industrial ETFs, meanwhile, have adapted to supply-chain rebalancing by prioritizing sectors like logistics, manufacturing, and energy transition technologies. These firms leverage automation, digital twins, and lean management to optimize costs—a critical edge in an era of rising input prices. For instance, global infrastructure assets under management have surged from $200 billion in 2010 to $1.5 trillion in 2025, with expectations to surpass $2 trillion by 2028. This growth reflects a structural shift toward capital-efficient, high-utility assets.

Geopolitical Tailwinds: Reshoring and the Energy Transition

The post-pandemic world is defined by two megatrends: the reshoring of critical industries and the acceleration of the low-carbon transition. Both favor industrial and infrastructure ETFs.

Reshoring efforts, driven by U.S. and European trade policies, are fueling demand for domestic manufacturing and transport infrastructure. For example, U.S. electric utility companies mentioned “AI” in their Q1 2025 earnings calls at three times the rate of the broader S&P 500, reflecting the surge in power demand for data centers and AI infrastructure. Similarly, Australia's iShares Core FTSE Global Infrastructure ETF (GLIN) has attracted $1.2 billion in assets since 2023, with 48% of its AUM in bond ETFs—underscoring investor appetite for stable, inflation-protected yields.

The energy transition further amplifies these tailwinds. Renewable energy, grid modernization, and hydrogen infrastructure are now core components of public-private partnerships. With global energy capital spending projected to exceed $3.5 trillion by 2030, infrastructure ETFs offer broad exposure to this transformation. For instance, the iShares U.S. Infrastructure ETF has seen a 35% inflow surge over three years, as investors bet on the long-term value of decarbonization.

Undervalued Earnings Potential: A Mispriced Opportunity

Publicly listed infrastructure assets trade at a discount to their private counterparts and global equities. As of 2025, listed infrastructure trades at 11.9x earnings, compared to 12.5x for private infrastructure and 13.5x for global equities. This valuation gap reflects market skepticism about infrastructure's growth potential, despite its strong fundamentals.

Historically, infrastructure has outperformed equities in 70% of quarters with negative equity returns over the past two decades, delivering an average excess return of 3%. This defensive profile, combined with its alignment to long-term trends like AI-driven power demand and re-shoring, makes it a compelling addition to diversified portfolios.

Investment Advice: Building a Resilient Portfolio

For investors, the case for industrial and infrastructure ETFs is clear. Here's how to position for the future:
1. Core Holdings: Allocate to broad infrastructure ETFs like GLIN or the iShares Global Infrastructure ETF (IGF) for diversified exposure to utilities, transport, and renewables.
2. Active Strategies: Consider active ETFs in fixed income or multi-asset infrastructure, which can exploit inefficiencies in the sector.
3. Currency-Hedged Options: In a weakened U.S. dollar environment, hedged infrastructure ETFs can protect returns from FX volatility.
4. Thematic Plays: Target sub-sectors like energy transition or AI infrastructure through specialized ETFs to capitalize on megatrends.

In a world of persistent uncertainty, industrial and infrastructure ETFs offer a rare combination of resilience, compounding potential, and alignment with structural shifts. As supply chains rebalance and geopolitical realities reshape global markets, these sectors are poised to deliver steady, long-term returns for forward-thinking investors.