Three distinct, but increasingly connected themes are firming up the case for listed real assets in 2026: HALO, PACE and LAPS. Together, they frame why infrastructure and listed property may be entering a more supportive phase. These are not only defensive diversifiers. They are becoming relevant allocations for income-focused portfolios.
For wealth managers and financial advisers, the three themes offer a useful framework for thinking about where durable income, valuation support and structural demand intersect.
Real assets rotate back into favour
One of the clearest market developments this year has been the rotation into physical asset-backed businesses. It has been described as the HALO trade: Heavy Assets, Limited Obsolescence.
After a long period in which capital concentrated in technology, software and long-duration growth assets, investors are reassessing the resilience of those earnings streams. In that setting, businesses backed by tangible assets and contractual cash flows are regaining attention.
The HALO thesis rests on three characteristics:
- Physical necessity: Infrastructure provides services society cannot function without
- Long-term contractual revenues: Often supported by regulated frameworks or government-backed agreements
- Limited obsolescence risk: Essential infrastructure is far less vulnerable to technological disruption or AI displacement than many other sectors
Infrastructure is more than insulated from technological change. In many cases, it enables that change. Digitalisation depends on fibre networks, data centres, energy supply and grid investment.
For investors, the combination is compelling: long-duration assets, visible cash flows and lower disruption risk, at a time when broader equity valuations remain concentrated in fewer sectors.
For strategies such as GCP Infrastructure Investments (LSE:GCP), TM Gravis UK Infrastructure Income, TM Gravis Clean Energy Income and TM Gravis Digital Infrastructure Income, HALO reinforces an investment case built on predictable income and physical asset backing.
Compounding income matters as much as asset value
If HALO explains why physical assets are regaining favour, PACE adds a second layer to the property case.
PACE stands for Physical Assets, Compounding Earners. It shifts the focus from owning assets to owning property businesses capable of growing income over time.
The distinction matters. In listed property, returns have long been tied to asset valuation movements. But Gravis's Matthew Norris argues the more durable source of long-term returns comes from operational execution: active management of assets to improve rents, occupancy and dividend growth.
That is relevant in sectors such as healthcare property, self-storage, logistics and urban mixed-use assets. These are often mission-critical assets where tenants depend on the property to operate. That dependence gives landlords stronger pricing power and greater income resilience.
The PACE philosophy centres on a simple principle: Always Be Compounding. The compounding shows up in the dividend records of several UK-listed property companies held within the TM Gravis UK Listed Property strategy, including businesses with more than a decade of consecutive dividend growth.
For advisers, this reframes the property conversation. Rather than viewing UK-listed property through the lens of cyclical valuation recovery, PACE positions it as a source of compounding contractual income, with the potential for inflation protection and long-term dividend progression.
In a market still concentrated in AI-related equities, that offers a differentiated return driver: physical assets generating recurring income rather than relying on future earnings expectations.
A structural catalyst emerges
The third theme is LAPS: Listed Assets for Pension Schemes.
The Government's Mansion House reforms and the recently enacted Pension Schemes Act are expected to direct substantial pension capital towards infrastructure, property and other long-duration productive assets. That reallocation should build over the coming years.
The Government estimates the reforms could release £50bn for investment into private assets, with £25bn directed towards the UK economy by 2030.
Much of the attention has focused on private market investing. But under the new legislation, pension schemes can meet these allocation requirements through listed vehicles, including investment companies and funds investing in them, where qualifying criteria are met. These include GCP Infrastructure Investments (LSE:GCP) Limited, TM Gravis UK Infrastructure Income and TM Gravis UK Listed Property.
The significant point is that much of the listed infrastructure and property market trades on substantial discounts to NAV, despite owning long-duration, inflation-linked and operationally essential assets.
For pension capital, that presents an interesting opportunity:
- Immediate access to productive assets
- Daily liquidity
- Governance and transparency
- No cash drag versus some private market structures
- Potential access to assets at discounts to underlying value
For wealth managers and advisers, LAPS could matter beyond pensions. If pension flows return to UK productive assets at scale, improved liquidity, narrowing discounts and broader institutional participation could create a meaningful rerating across listed infrastructure and property.
A coherent narrative
HALO, PACE and LAPS are separate ideas. Together they form a coherent narrative. HALO strengthens the case for essential, lower-obsolescence infrastructure. PACE reframes listed property as an income-compounding allocation rather than a valuation trade. LAPS introduces a structural demand catalyst that could help close persistent valuation discounts.
With many client portfolios still exposed to concentrated global equity leadership, UK-listed real assets offer a different set of characteristics: contracted and often inflation-linked cashflows, lower correlation to traditional equities, tangible asset backing, potential upside from discount narrowing and long-term structural relevance.
After a prolonged period of under-ownership, the backdrop for UK real assets may be changing. If 2026 marks the start of a broader reallocation towards productive capital, HALO, PACE and LAPS could prove the frameworks that explain where the opportunity sits.
