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 securities 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 small number of companies/countries, a single country/sector, a specific region, a 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 September 2025

Global Listed Infrastructure rose in September as financial markets were buoyed by monetary policy support and resilient corporate earnings. The FTSE Global Core Infrastructure 50/50 index returned +2.0% in September, while the MSCI World index^ ended the month +3.2% higher.

The best performing infrastructure sector was Railroads (+4%) as freight volumes remained solid and the probability of merger activity increased. The worst performing infrastructure sector was Towers (-4%). US tower stocks declined due to a diminishing growth outlook as EchoStar (not in our Focus List) continued to offload spectrum, thereby removing a potential fourth network customer for US tower companies.

The best performing infrastructure region was Canada (+4%) due to strength in Energy Midstream companies supported by growth in (gas-fired) power demand and lower Canadian interest rates and currency. The worst performing infrastructure region was Australia (-3%) owing to weakness in toll road stocks.           

                                 

^ MSCI World Net Total Return Index (USD) is provided for information purposes only. Index returns are net of tax. Data to 30 September 2025. Source: Bloomberg, First Sentier Investors / Lipper IM. All stock and sector performance data expressed in local currency terms.

Fund performance

The Fund returned +1.9% after fees in September, 1 basis point behind the FTSE Global Core Infrastructure 50/50 Index (USD, Net TR). 

The best performing stocks in the portfolio were US utilities. Eversource Energy (+12%) rallied following changes at the Connecticut utilities regulator (PURA). Chair Gillett resigned after mounting legal issues related to her bias in utility cases, lifting an overhang on the stock. Eversource also received a court injunction on a stop-work order related to Revolution Wind, allowing construction to resume on this offshore wind project and reducing the threat of cost overruns or cancellation. Xcel Energy (+12%) reached settlements to pay $640 million (of which $350 million is covered by insurance) to resolve all claims related to the 2021 Marshall Fire. The stock rallied as the market had feared billions of dollars of damages.

Sempra (+9%) announced an agreement to sell 45% of its subsidiary Sempra Infrastructure Partners (SIP) to private equity firm Kohlberg Kravis Roberts & Co (KKR) and Canadian pension fund (CPP). The $10 billion cash transaction values SIP at an enterprise multiple of 13.8x and implies an equity value around 50% higher than comparable listed Liquefied Natural Gas (LNG) terminals. SIP also announced that Blackstone, KKR, Apollo and Goldman Sachs would contribute half the funding for Port Arthur Phase 2, an LNG export capacity expansion set to cost $12 billion. The SIP transactions strengthen the Sempra balance sheet and eliminate future equity needs ahead of significant regulated capex opportunities. Sempra’s Texas subsidiary Oncor is embarking on a $36-48 billion capex program (15-19% annual rate base growth) to meet the power demands of data center and electrification customers.

Mergers and acquisitions (M&A) developments also drove performance in US railroads. The proposed merger between Union Pacific (+6%) and Norfolk Southern (+7%) gained momentum as the Trump administration, railroad unions and some customers signalled broad support for the deal. East coast railroad peer CSX (+9%) also climbed as approval of one transcontinental merger would likely trigger a competitive response from Burlington Northern (part of Berkshire Hathaway) or Canadian freight rail peers (Canadian National Railway or CPKC). CSX also confirmed the re-opening of the Blue Ridge Subdivision (60 miles of track in Tennessee and North Carolina that had been impacted by Hurricane Helene) and the Howard Street Tunnel (an upgrade of a 125-year-old tunnel serving the Port of Baltimore). Both projects had caused disruption and increased costs to the network in recent quarters. Further, the CSX board appointed a new CEO Steve Angel, who is deemed to have strong credentials across both corporate M&A and operating efficiency.

The worst performing stocks in the portfolio included SBA Communications (-6%) as the growth outlook for wireless towers continued to diminish. EchoStar sold spectrum to AT&T and SpaceX and rumours emerged of further spectrum sales to Verizon. This is expected to result in some churn for tower companies over coming years and eliminates the prospect of growth from a fourth US mobile network. In recent months the portfolio has reduced exposure to American Tower (-5%) and Crown Castle (-2%), providing positive relative performance.

Airports also hit some turbulence after strong performance in the previous month with Japan Airport Terminal (-6%), Beijing Airport (-6%) and Mexico’s GAP (-4%) all weaker. Airline capacity remains constrained due to aircraft manufacturing and engine performance challenges, capping the outlook for passenger growth.

Politics continued to present challenges for toll roads. Transurban (-5%) fell on concerns that the NSW toll review had made limited progress, with reports it could be delayed until mid-2026. There were also ambit claims from contractors on Melbourne’s West Gate Tunnel, prior to the expected opening of this troubled project later this year. Atlas Arteria (-4%) was also down as concerns for the French budget resurfaced with implications that extraordinary corporate taxes may be extended. In contrast, PINFRA (+7%) performed well as the market expects a more constructive Mexican administration to support a pipeline of growth opportunities which can be funded from the proceeds of its recent port sale. Motiva (+3%) also performed well as the company outlined discipline on costs and optimism for the upcoming sale of the airports business. 

Fund activity

The portfolio initiated a position in Danish renewables company Ørsted, which expects to have installed generation capacity of 27 gigawatts (GW) by 2027. The company has been plagued by issues in recent years, including offshore wind project delays and cost overruns, stop-work orders from the Trump administration, disappointing UK contracted price auctions, lower than normal wind speeds, lower than expected asset sale proceeds, and senior management turnover. These issues, compounded by significant project funding requirements, produced a downward spiral in the stock price. A deeply discounted rights issue created an attractive entry point to build a position in Ørsted. With the balance sheet in better shape and growth / return expectations rebased, we think a more disciplined management team can deliver strong returns for investors in the coming years.

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 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.

Toll roads remain the portfolio’s largest sector overweight. Their domestically focused business models give them limited direct sensitivity to tariffs or trade restrictions. Revenues are typically robust, supported by consistently high operating margins. Pricing is often linked to inflation, with negotiated compensation for additional capital expenditure. Over the medium term, additional road capacity will be needed to ease urban congestion in the developed world and to support economic development in the developing world. In the absence of sufficient government funding, toll road operators are well-positioned to meet this need.

The portfolio is also overweight railroads, via holdings in US freight rail operators and European and Japanese passenger rail stocks. North American freight rail companies represent a key component of the continent’s transportation system and are a core part of the global listed infrastructure opportunity set. Recent M&A activity in this space is expected to support earnings growth by providing scope for reliability improvements, faster transit times and cost efficiencies.

Utilities / renewables make up a substantial part of the portfolio. These stocks are set to benefit from unprecedented growth in demand for electricity, being driven by the needs of Artificial Intelligence (AI) AI and data centers, as well as industrial onshoring and a broad-based move towards electrification. Earnings growth rates for US utilities have already begun to accelerate due to the required investment to support greater demand for power. In the event of an economic downturn, utility earnings are likely to prove relatively resilient, owing to their regulated earnings frameworks and essential service nature.

The portfolio is underweight energy midstream. Within this space, 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 also likely to support demand for natural gas as a feedstock for gas-fired power plants, creating additional growth opportunities for US-based energy midstream companies. 

Source : Company data, First Sentier Investors, as of 30 September 2025.

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 Group 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 First Sentier Group, 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 material may not be edited and/or reproduced in whole or in part without the prior consent of First Sentier Group. 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 Group’s portfolios at a certain point in time, and the holdings may change over time.

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 Group, First Sentier Investors, FSSA Investment Managers, Stewart Investors, RQI Investors and Igneo Infrastructure Partners are the business names of First Sentier Investors (Hong Kong) Limited.

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

© First Sentier Group