Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure declined in September against the backdrop of a sharp rise in global bond yields and interest rate increases by central banks in the US, EU, Japan and Australia. The FTSE Global Core Infrastructure 50/50 Index fell by -5.4%; the MSCI World Index^{^} finished the month -1.2% lower.

The best performing infrastructure sector was Other (+3%), which consists of companies with weaker infrastructure characteristics, such as ports and satellites, that are screened out of our Focus List. Performance was driven primarily by Emerging Markets port stocks, reflecting recent growth in freight volumes

The worst performing infrastructure sector was Towers / Data Centres (-8%). US mobile tower stocks contracted cash flows and relatively high leverage saw them underperform as US 10-year Treasury yields reached their highest level since 2002. Energy Midstream (-8%) also lagged as investors took profits following strong year-to-date gains.

The best performing infrastructure region was Latin America (+3%). Growing expectations that Brazil’s October presidential election could result in a more economically orthodox administration drove broad-based gains for the country’s infrastructure stocks and wider equity market. A mid-month interest rate cut by the Central Bank of Brazil provided an additional tailwind. The worst performing infrastructure region was Australia / NZ (-10%), as rising bond yields weighed on its toll road operators.

^{^} MSCI World Net Total Return Index USD is provided for information purposes only. Index returns are net of tax. Data to 30 September 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 asset class remains supported by several structural growth drivers. Electric utilities face rising capital expenditure requirements as Artificial Intelligence (AI) adoption and data centre growth drive substantial increases in electricity demand. As well as adding power generation capacity, utilities are investing to expand, modernise, and strengthen their electricity transmission and distribution grids. Under the US regulatory model, this increased capital investment typically translates into rate base growth, which in turn supports earnings growth. While policymakers’ focus on affordability and data center pushback have grown in recent months, these developments are moderating, not stopping, infrastructure capital investment. We believe the long-term opportunity for utilities remains substantial.

Digitalisation remains another key theme for the asset class. Data centers continue to benefit from companies migrating IT equipment from on-premises environments to co-location facilities and cloud-based platforms, attracted by greater flexibility, scalability, and reliability. Additionally, the surge of interest in AI is driving data center demand, as well as increasing demand for electricity.  We expect structural growth in demand for mobile data, underpinned by increasing reliance on digital connectivity, to support steady revenue growth in the mobile tower sector. Rising interest rates weighed on US mobile towers in September. This risk is now better reflected in valuation multiples. At current levels, these stocks represent an opportunity for long-term investors to invest in high-quality, cash generative businesses at attractive valuations.

Airports are well-positioned to benefit from the ongoing drivers behind global travel demand growth, including wealthy baby boomers with disposable income to spend on travel during their retirement, Gen Z prioritising experiences over possessions, and the expansion of middle-class populations in Asia and Latin America. Projections from the International Air Transport Association anticipate continued growth in global air travel demand, with passenger traffic projected to expand at a compound annual growth rate of between 3.1% and 3.6%, over the 2024-2044 period.

Source : Company data, First Sentier Investors, as of 30 September 2026.