Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Important Note Click to maximise

Please read the following important information for First Sentier Global Listed Infrastructure Fund

• The Fund invests primarily in global listed infrastructure and infrastructure-related equity or equity related securities worldwide. Investments in infrastructure projects may involve risks including projects not being completed on time and within budget, changes in environment laws and regulations.

• The Fund’s investments may be concentrated in a single and limited/specialist sector or in fast growing economies which may have higher volatility or greater loss of capital than more diversified portfolios. The Fund may also expose to RMB currency and conversion risk.

• Small/ mid-capitalisation securities may have lower liquidity and their prices are more volatile to adverse economic developments.

• The Fund may use FDIs for hedging and efficient portfolio management purposes, which may subject the Fund to additional liquidity, valuation, counterparty and over the counter transaction risks

• For certain share classes, the Fund may at its discretion pay dividend out of capital or pay fees and expenses out of capital to increase distributable income and effectively a distribution out of capital. This amounts to a return or withdrawal of your original investment or from any capital gains attributable to that, and may result in an immediate decrease of NAV per share.

• It is possible that a part or entire value of your investment could be lost. You should not base your investment decision solely on this document. Please read the offering document including risk factors for details.

Global Listed Infrastructure Monthly review and outlook

Global Listed Infrastructure Monthly review and outlook

A monthly review and outlook of the Global Listed Infrastructure sector.

Market review - as at June 2022

Global Listed Infrastructure decreased as central bank tightening measures, elevated inflation levels and concerns for lower economic growth rates continued to weigh on financial markets. The FTSE Global Core Infrastructure 50/50 index fell -6.2%, while the MSCI World index^ ended the month -8.7% lower.

The best performing infrastructure sector was Toll Roads (+1%), which were supported by the appeal of inflation-linked tolls and the prospect of takeover activity. The worst performing infrastructure sector was Energy Midstream (-10%), on the view that a slowing economic growth rate would reduce demand for hydrocarbons.

The best performing infrastructure region was Japan (+7%), traditionally viewed as a defensive haven during volatile markets. Its utilities performed strongly on the view that the record-breaking heatwave currently enveloping the country would lead to higher air conditioner usage and increased electricity demand. The worst performing infrastructure region was Latin America (-7%), as investor interest in higher beta areas of the market waned.


^ MSCI World Net Total Return Index USD is provided for information purposes only. Index returns are net of tax. Data to 30 June 2022. Source: First Sentier Investors Lipper IM.

Fund performance

The Fund returned -7.5% after fees in June, 129 bps behind the FTSE Global Core Infrastructure 50/50 Index (USD, Net TR).

The best performing stock in the portfolio was Australian-listed toll road operator Atlas Arteria (+12%), which owns toll roads in France, the US and Germany. The stock surged after direct infrastructure manager IFM Investors announced it had built a 15% stake and suggested that it may launch a takeover bid for the entire company. Mexican peer Pinfra (+9%) recovered ground after the appointment of a new auditor eased investor concerns about delays to the publication of audited financial statements for 2021. Transurban (+2%), whose assets include the main toll road networks in Australia’s three largest cities, also outperformed as takeover interest in Atlas Arteria highlighted the appeal of its long-life, cash generative assets. The concession terms of the vast majority of Transurban’s roads allow tolls to be increased by at least the rate of inflation. In contrast, Brazil’s CCR (-6%) gave up ground as the risk-off environment overshadowed healthy traffic volumes (consistently above 2019 levels) on its toll roads.

Other strong performers during the month included West Japan Railway (+5%) following news that restrictions on the number of international travellers visiting Japan would be eased; and that the country’s “Go To Travel” promotion for domestic tourists may be restarted. The company’s rail network service territory includes the culturally rich Kansai region. China Gas (+4%) increased on indications that demand for natural gas in China was increasing as the country’s coronavirus lockdown measures are lifted. News that the G7 group of countries were considering implementing a price cap on oil and natural gas exports from Russia provided an additional tailwind to China’s gas utilities, on hopes for lower input costs.

Large cap US utility and renewables leader NextEra Energy (+2%) gained after raising earnings guidance to almost 10% per annum between 2021 and 2025, underpinned by the substantial investment opportunities presented by the transition to renewables. The company also announced a “Real Zero” target, under which it plans to eliminate carbon emissions from its operations by 2046, while providing carbon emissions-free energy to its customers. However, other US utilities including FirstEnergy (-11%), PPL Corp (-9%) and Sempra Energy (-8%) decreased as investors took profits and the US Federal Reserve raised interest rates by larger-than-expected 0.75%.

The worst performing stock in the portfolio was US energy midstream company Targa Resources (-17%), which was affected by concerns of an economic slowdown. During the month the company agreed to acquire natural gas processor Lucid Energy for $US3.5 billion, in an acquisition which complements Targa’s existing Texas-focused energy infrastructure footprint. Other energy midstream stocks DT Midstream (-15%) and Pembina Pipeline (-10%) gave up ground for similar reasons.

In the airports space, Spain’s AENA (-15%) underperformed despite upgrading its traffic forecasts for the 2022 calendar year, as the prospect of recession raised concerns that people may be less willing to spend on holidays and overseas travel. Switzerland’s Flughafen Zurich (-11%) underperformed for the same reason. Staff shortages in the transportation sector and a series of transport strikes across Europe also weighed on sentiment towards these stocks. Mexican peer ASUR (-8%) fared somewhat better, after May data showed that passenger volumes at its airports had now reached 120% of 2019’s pre-pandemic levels.

Fund activity

The Fund divested its position in large cap Spanish-listed electric utility Iberdrola. After investing in the stock in September 2021, the easing of political risk concerns and a growing focus on the build-out of renewables in Europe drove share price outperformance, moving the stock to a lower ranking within our investment process.

Market outlook and fund positioning

The Fund invests in a range of listed infrastructure assets including toll roads, airports, railroads, utilities and renewables, energy midstream, wireless towers and data centres. 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.

Against a challenging economic backdrop, listed infrastructure remains supported by a number of structural growth drivers. We remain optimistic about the substantial investment opportunities associated with the decarbonisation of the world’s energy needs. Utilities, which represent about a half of the listed infrastructure opportunity set, are positioned to derive steady, regulated earnings growth by building solar and wind farms, and by upgrading and expanding the networks needed to connect these new power sources to the end user. Portfolio holdings Entergy, NextEra Energy and PPL Corp were amongst the US utilities that increased their earnings guidance in June as a result of additional investment in these areas — a welcome contrast to the turmoil seen elsewhere in financial markets.

Digitalisation is another key theme for the asset class. Structural growth in demand for mobile data (underpinned by an ever-growing reliance on digital connectivity) continues to support steady earnings growth for Towers and Data Centres, insulating them from the ebbs and flows of the broader global economy. The changes required during the pandemic have already led to a greater reliance on wireless data in many people’s everyday lives. The adoption of 5G technology over the medium term will require networks to handle increased data speed, and a much higher number of connected devices.

The asset class also continues to receive valuation support from the unlisted market. The expected takeover offer for Atlas Arteria would make it the latest Australian listed infrastructure company to be acquired by private buyers, following the acquisitions of Spark Infrastructure, Ausnet Services and Sydney Airport during the past 12 months. These offers illustrate the appeal that these long life and often unique assets present to sovereign wealth funds, private equity, unlisted infrastructure managers and trade buyers alike.


Source: Company data, First Sentier Investors, as of 30 June 2022.

These figures refer to the past. Past performance is not a reliable indicator of future results. For investors based in countries with currencies other than the base currency of the share class, the return may increase or decrease as a result of currency fluctuations. Performance data calculated since the launch date. Performance data is calculated on a net basis by deducting fees incurred at fund level (e.g. the management and administration fee) and other costs charged to the fund (e.g. transaction and custody costs), save that it does not take account of initial charges or switching fees (if any). Income reinvested is included on a net of tax basis. First Sentier Global Listed Infrastructure Fund, Class I (Distributing) USD shares. Benchmark is the FTSE Global Core Infra 50/50 TR Index from 1 April 2015, prev. UBS Global Infra & Utilities 50/50 TR Index.

Important Information

Investment involves risks, past performance is not a guide to future performance. Refer to the offering documents of the respective funds for details, including risk factors. The information contained within this material has been obtained from sources that First Sentier Investors (“FSI”) believes to be reliable and accurate at the time of issue but no representation or warranty, expressed or implied, is made as to the fairness, accuracy or completeness of the information. To the extent permitted by law, neither FSI, nor any of its associates, nor any director, officer or employee accepts any liability whatsoever for any loss arising directly or indirectly from any use of this. It does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. The information in this material may not be edited and/or reproduced in whole or in part without the prior consent of FSI.

This material is issued by First Sentier Investors (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission in Hong Kong. First Sentier Investors is a business name of First Sentier Investors (Hong Kong) Limited.

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of First Sentier Investors’ portfolios at a certain point in time, and the holdings may change over time.

First Sentier Investors (Hong Kong) Limited is part of the investment management business of First Sentier Investors, which is ultimately owned by Mitsubishi UFJ Financial Group, Inc. (“MUFG”), a global financial group. First Sentier Investors includes a number of entities in different jurisdictions.

To the extent permitted by law, MUFG and its subsidiaries are not responsible for any statement or information contained in this material. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment or entity referred to in this material or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.