Islamic Global Listed Infrastructure Equities
Executive Summary
Infrastructure equities can be play the role of “defensive engine” inside a diversified portfolio: they provide exposure to essential services—keeping the lights on, clean water flowing, goods and people moving, and data connected—often supported by resilient demand, predictable cashflows and above-average income potential.
Shariah compliance doesn’t remove the infrastructure opportunity; it refines it. Applying Shariah screens reduces the eligible universe, but it also reshapes sector and regional exposures—creating a distinct subset of infrastructure equities with different macro sensitivities. For Islamic multi-asset portfolios—where diversification can be constrained and equity benchmarks can be technology-heavy—Islamic listed infrastructure equities can help fill a meaningful gap.
Benefits of investing in infrastructure equities
Infrastructure is best understood as the physical assets and networks that deliver essential services that economies and societies rely on every day. These assets typically operate across four broad sectors: communication, energy, transportation and utilities.
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Many infrastructure assets share a set of potentially attractive features for investors:
- Essential-service demand: usage is often less discretionary, which can support more resilient revenues across economic cycles.
- High barriers to entry: large upfront capital requirements, long development timelines, and regulatory/permitting complexity can limit competition.
- Long asset lives: assets are built to operate over decades, supporting long-term planning and reinvestment.
- Predictable cashflows: revenues are often shaped by regulation (tariff frameworks and allowed returns) and/or long-term contracts (including take-or-pay style arrangements in certain segments), which can improve cashflow visibility.
- Potential inflation linkage: where tariffs or contracts include indexation or periodic resets, cashflows may have some ability to keep pace with inflation.
Listed infrastructure equities refer to publicly traded companies that own and/or operate infrastructure assets worldwide. They have grown meaningfully over the past decade, as investors increase the allocation to the asset class:
- Liquid alternative to direct infrastructure: investors can access infrastructure exposure immediately and adjust allocations efficiently
- Income potential: infrastructure assets are typically long-duration in nature, generating potentially high distribution levels
- Defensive building block within equities: resilient cashflows can underpin a more defensive equity profile
Shariah compliance: an evolution, not just a constraint
Shariah-compliant investing is an approach that seeks to align investment activity with Islamic principles. In listed equities, this is typically implemented through a transparent screening framework:
- Business activity screens: Companies are excluded if they derive material revenue from prohibited activities such as alcohol, conventional financial services, gambling, pork-related products, and military/weapons of mass destruction.
- Financial ratio screens: Companies are assessed against measures such as debt and cash/interest-bearing securities relative to market value or assets.
For infrastructure investors, the financial ratio screen is often the more consequential, because many conventional infrastructure business models use higher level of leverage.
Shariah investing principles reshapes the infrastructure opportunity set
Applying the Shariah-compliant screens to the Core Infrastructure universe reduces its size by two thirds, i.e. from c. 380 to c. 120, across utilities, transportation, energy infrastructure and communications.
Exhibit 1: Impact of Shariah compliant screens (Compliant vs non-compliant)
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Source: HSBC Asset Management as of 31 March 2026
Exhibit 2: Market cap by sector (Core Infrastructure vs Islamic Core Infrastructure)
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Source: HSBC Asset Management, Bloomberg as of 31 March 2026
More importantly, for investors, Shariah compliant screening does not only reduce the number of eligible companies—it changes the shape of the opportunity set, shifting sector and regional composition. That reshaping matters because infrastructure sectors and regions have different sensitivities to macro drivers such as GDP growth, inflation and interest rates.
Exhibit 3: Sector mix shift (market cap weights)
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Source: HSBC Asset Management, Bloomberg as of 31 March 2026
Exhibit 4: Regional mix shift (market cap weights)
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Source: HSBC Asset Management, Bloomberg as of 31 March 2026
Macro sensitivities: Islamic infrastructure behaves differently
Different infrastructure sectors respond differently to macro conditions:
Exhibit 5: Macro sensitivity across infrastructure sectors
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Source: HSBC Asset Management as of 31 March 2026
As shown in the table below, the different sector mix between the two universes can create a meaningful difference in overall macro sensitivities.
Exhibit 6: Macro sensitivity comparison (Core Infrastructure vs Islamic Core Infrastructure)
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Source: HSBC Asset Management, Bloomberg as of 31 March 2026
For investors, this is the key takeaway: Islamic infrastructure equities is not just “conventional infrastructure with exclusions”—it can deliver a different macro profile.
Despite the Shariah compliance screens changing the shape of the opportunity set, the historical performance between Core Infrastructure and Islamic Core Infrastructure is comparable in the medium to long term. It is encouraging to see that investors are not sacrificing return for compliance.
Exhibit 7: Medium-long term performance comparison
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Source: HSBC Asset Management, Bloomberg as of 31 March 2026
Exhibit 8: 10-year cumulative return comparison
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Source: HSBC Asset Management, Bloomberg as of 31 March 2026
Filling a gap in Islamic equities portfolios
Islamic funds emerged in the 1980s and expanded rapidly in the early 2000s—first across Muslim-majority countries, and later in non-Muslim-majority markets such as the UK1. The Islamic funds market has continued to mature, with total Islamic funds AUM reaching USD308 billon in 2024 across 2,610 funds, and projected to rise to around USD538 billion by 20292.
Exhibit 9: Islamic funds AUM growth
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Source: ICD–LSEG Islamic Finance Development Report 2025
However, Islamic funds still represent a relatively small share of the broader Islamic finance ecosystem, and demographic tailwinds in favour of Shariah-compliant investing have not been fully reflected in fund markets. Compared to the conventional market landscape, there is a limited range of Islamic funds, which present challenges for investors seeking to diversify beyond broad Shariah-compliant equity exposures.
Exhibit 10: Islamic finance industry breakdown
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Source: ICD–LSEG Islamic Finance Development Report 2025
And this is particularly relevant at a moment in which investors globally have been wanting to “broadening out” from the large exposure of equities’ indexes to mega-cap technology stocks, because of concerns on valuations and concentration risk. Shariah-compliant equity benchmarks tend to have an even heavier exposure to the technology sector, which may increase concentration risk for Islamic equities’ investors.
For example, the Dow Jones Islamic Market Titans 100 Index, a leading global equity benchmark tracking 100 of the largest Shariah-compliant companies, has over 40 per cent exposure to Information Technology, towering over all the other sectors including infrastructure (less than 1 per cent). Given the very limited exposure to infrastructure, a dedicated allocation to Islamic infrastructure equities offers the potential for diversification and can play a role as a more defensive component within an equity allocation — benefits that many investors may be seeking in a market environment where volatility is rising and inflation concerns are re-emerging.
Exhibit 11: DJ Islamic Market Titans 100 Sector Exposures
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Source: Dow Jones as of 31 December 2025
The potential for infrastructure to provide diversification benefits is also reflected in the correlation between the DJ Islamic Market Titans 100 and Islamic Core Infrastructure. As seen in Exhibit 12, historic correlation has averaged around 0.75 and has declined more recently. Ultimately, Islamic infrastructure equities can represent a very valuable building block for asset allocation consideration when managing an Islamic multi-asset portfolio.
Exhibit 12: DJ Islamic Market Titans 100 Correlation vs Islamic Core Infrastructure
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Source: HSBC Asset Management, Bloomberg as of 31 December 2025
Conclusion
Listed infrastructure equities can be an important defensive building block in diversified portfolios, offering exposure to essential-service assets with resilient and predictable cashflows, attractive risk-adjusted and de-correlated returns, and above-average income potential.
Shariah compliance reshapes the infrastructure opportunity set—reducing the eligible universe and changing sector and regional composition—but Islamic infrastructure equities remain a viable and compelling option for investors seeking infrastructure exposure within Shariah-based principles. For Islamic multi-asset portfolios in particular, they can help address diversification constraints and reduce concentration risk from tech-heavy Shariah equity benchmarks.
1TheCityUK (2022). Islamic finance: global trends and the UK market
2ICD–LSEG Islamic Finance Development Report 2025
Diversification does not protect against loss, nor does it guarantee profit.
Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Asset Management accepts no liability for any failure to meet such forecast, projection or target.
Key Risks
Further information on the potential risks can be found in the Key Investor Information Document (KID) and/or the Prospectus or Offering Memorandum.
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