Claire Simmonds, client portfolio manager for the JP Morgan emerging markets equity team said they expect infrastructure spending will reach over $20trn throughout the next decade.
"This is supported by decades of under investment in infrastructure, and urbanisation trends will drive infrastructure spending across global emerging markets," she said.
"If you think about what is driving economic growth productivity in the emerging world it is urbanisation. According to the UN, 45 per cent of the emerging markets population currently lives in cities. There is a long-term predictable move of people from rural areas to the city and we think that trend is going to continue, develop and accelerate in the next 10 to 20 years.
"The expectation is that the urban population in emerging markets will grow by two per cent per annum over the next 15 years. The need for infrastructure development is crucial and it is also one of the key determinants of success for emerging markets."
Bruno Lippens co-fund manager of the Pictet High Dividend Selection fund agrees and said the need for infrastructure continues to grow gradually worldwide.
"The main drivers of this growth are continued growing demand for communication, transportation, electricity transmission and energy distribution. Emerging markets should continue to see higher incremental investment needs as the existing infrastructure is less well developed and demographics boosts the need for additional investments," he said.
Data from Financial Express shows there are four IMA UT and OEIC defined funds with a specific focus on infrastructure. Over a three year period to 18 August 2010, the performance of the funds varied from 14.90 per cent to 42.26 per cent, with three of the four funds outperforming the FTSE All Share Index.
Source: Financial Express Analytics
Over a one year period all four funds outperformed the FTSE All Share:
Source: Financial Express Analytics
Simmonds said during the financial crisis infrastructure spending was an essential part of economic stimulus for many emerging markets economies.
"China and South Africa are good examples of that. Infrastructure created jobs through domestic projects, it supported commodity prices and it provided business opportunities for domestic and private enterprises," she said.
"Infrastructure was less vulnerable to the recession then you might expect. If you look to the future, I think because of this urbanisation trend, infrastructure as a theme is a very long term one and is less vulnerable to the financial markets and international trade than other parts of the emerging markets story."
However, Lippens said that whilst the recession has had a very muted impact on the demand side for infrastructure, there has been delays to new projects.
"The delays were mainly caused by a spike in risk-aversion in the aftermath of the Lehman bankruptcy. This has temporarily complicated financing, hence making it more expensive," he said.
Looking ahead Lippens said he expects to see high and stable dividends being paid in infrastructure investing and says there are opportunities in both the developed and emerging world.
"We believe that the main attractiveness in infrastructure investing lies in the operator's capacity to generate stable and predictable cash-flows that allow high and stable dividend payments to shareholders.
Whereas a majority of emerging infrastructure projects are still too young to pay dividends, as they re-invest 100 per cent of their cash-flows, we expect this to change going forward," he said.
"We see interesting opportunities both in developed markets where we think infrastructure operators are undervalued by the market today, as well as in emerging markets where continued superior growth will drive significant yields in the future."
Focusing on countries Simmonds said China has been at the forefront of infrastructure spending over the last decade.
"Over the last 12 months we have seen China continuing to spend a large amount of money on infrastructure. We are also seeing infrastructure spending increasing across Eastern Europe, Latin America,
Middle East and interestingly for the future, Africa as well."