Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure eased in August as investors shrugged off ongoing geopolitical tensions and rotated towards higher beta assets. The FTSE Global Core Infrastructure 50/50 Index declined by -1.8%; the MSCI World Index^{^} finished the month +2.6% higher.

The best performing infrastructure sector was Energy Midstream (+2%). US operators reported strong quarterly earnings underpinned by a keen appetite for natural gas, both for export to overseas markets and for domestic US electricity generation. The worst performing infrastructure sector was Utilities / Renewables (-4%) as mounting public opposition to data centers, and the absence of a sought-after resolution to wildfire liabilities in California, weighed on regulated US utilities.

The best performing infrastructure region was Japan (+4%), where electric utilities gained on the view that they may be given greater scope to pass rising costs on to their customers than had previously been assumed. The worst performing infrastructure region was Latin America (-4%), reflecting weakness in Mexican airport stocks.

^{^} MSCI World Net Total Return Index (USD) is provided for information purposes only. Index returns are net of tax. Data to 31 August 2026. Source: First Sentier Investors UK Funds Limited/Lipper IM.

The strategy invests in a range of listed infrastructure assets including toll roads, airports, railroads, utilities and renewables, energy midstream, wireless towers, and data centers. These sectors share common characteristics, like barriers to entry and pricing power, which can provide investors with inflation-protected income and strong capital growth over the medium term.

The portfolio has an overweight exposure to airports. The sector is well-positioned to benefit from several structural drivers of global travel demand; wealthy baby boomers spending more on travel in retirement, Gen Z prioritising experiences over possessions, and the expansion of middle-class populations in Asia and Latin America. While sentiment towards the sector has been affected by regulatory uncertainty, and by the ongoing conflict between the US and Iran, we believe the magnitude of the earnings impact is likely to be less severe than current market pricing implies.

The portfolio is overweight railroads through holdings in US freight rail operators and European and Japanese passenger rail companies. North American freight rail businesses represent a critical component of the continent’s transportation network and are an important part of the global listed infrastructure opportunity set. Proposed M&A activity in the sector is expected to support earnings growth by providing scope for reliability improvements, faster transit times and cost efficiencies.

Utilities / renewables make up a significant portion of the portfolio. These stocks are benefiting from unprecedented growth in electricity demand, driven by the needs of AI and data centers, as well as industrial re-shoring and a broad-based move towards electrification. Earnings growth rates for US utilities have already begun to accelerate as investment increases to meet rising power demand. We believe the long-term opportunity for utilities remains substantial, despite recent scrutiny from policymakers seeking to respond to concerns about the potential impact on customer bills. Utilities are also working to address this issue through measures such as large-load tariffs (specialised pricing structures designed for high-capacity users).

The portfolio is underweight energy midstream. Within the sector, the portfolio has overweight exposure to faster-growing US energy midstream stocks but is substantially underweight Canadian companies, which tend to have higher leverage and slower growth. Rising demand for electricity in the US, as well as being positive for utilities, is supporting demand for natural gas as a fuel source for gas-fired power generation, creating additional growth opportunities for US-based energy midstream companies. The Ukraine and Middle East conflicts also provide opportunities for North American energy midstream companies to serve export markets by providing a relatively low cost and reliable source of LNG and Natural Gas Liquids.

Source : Company data, First Sentier Investors, as of 31 August 2026.