Market commentary
The global listed infrastructure sector was stronger over April with the benchmark index (FTSE Global Core Infrastructure 50/50 Index Net Tax USD) returning 3.55% over the month.
Global equities were much stronger as measured by MSCI World, returning 10.17% in USD terms.
US 10 year bond yields crept higher again with the yield ending the month at 4.39% which reflected rising inflation expectations.
Portfolio commentary
The Fund currently holds 31 global infrastructure stocks and returned 2.98% for April which was behind the benchmark. Year to date the Fund is up 11.75%, which is slightly behind the benchmark that has returned 11.98%.
The UK regulated water sector performed well in April. The main news was an £800m equity raise issued by United Utilities that will part fund a £2.5b increase to their original capex plan of £9.0b for the five-year regulatory period to 2030. Their Regulated Asset Base will now grow at approximately 10% p.a. for the five-year period. The increased investment will come via ‘re-openers’ on items like datacentre water supply and wastewater treatment for new homes. Our holding in Severn Trent was also stronger on the same re-opener theme.
Some of our holdings in US water and electric utilities were weaker over the month.
Outlook
Despite ongoing geopolitical volatility and further Iran war uncertainty, the listed infrastructure sector remains defensive and well positioned to keep building assets and earnings for investors. The HALO (Heavy Assets, Low Obsolescence) nature of infrastructure makes the companies relatively stable in an environment where the future AI impact on business models across the economy is creating uncertainty.
Large amounts of capital continue to be invested by infrastructure companies to facilitate mega themes of our time including decarbonisation, digitalisation, water quality and transportation.
