Market commentary
The global listed infrastructure sector was weaker over September with the benchmark index (FTSE Global Core Infrastructure 50/50 Index Net Tax USD) returning -5.43%.
Global equities were weaker, with the MSCI World returning -1.15% in USD terms.
Global long bond yields continued to climb as a response to concerns over inflation and subsequent central bank actions to raise interest rates. US 10-year bond yields climbed to 5.29%, which was a steep increase versus 4.76% a month earlier. Other developed countries also experienced higher yields that have not been seen in approximately 20 years.
Portfolio commentary
The Portfolio currently holds 31 global infrastructure stocks and returned -5.33% for September which was ahead of the benchmark. Year to date the Portfolio is up 2.18%, which is behind the benchmark which has returned 3.31%. Global equities are well ahead with a return of 12.09% year to date in USD.
With the rising bond yields, most infrastructure stocks were weaker. We did see strength in Brazilian infrastructure over the month, with Portfolio toll road company Ecorodovias up 31%. There was modest strength in European infrastructure holdings EDP and Vopak.
Cell towers were weaker, as were the European toll road holdings due to persistent high fuel prices and taxation fears in France.
Outlook
Despite ongoing geopolitical volatility, the listed infrastructure sector remains defensive and well positioned to keep building assets and earnings for investors.
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.
