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 August 2025

Global Listed Infrastructure rose in August as financial markets were buoyed by the prospect of US interest rate cuts. The FTSE Global Core Infrastructure 50/50 index returned +1.5% in August, while the MSCI World index ended the month +2.6% higher.

The best performing infrastructure sector was Toll Roads (+5%), as healthy traffic volumes underpinned robust June quarter earnings numbers. The worst performing infrastructure sector was Towers / Data Centers (-3%). US tower stocks declined on news that EchoStar (not in our Focus List) had abandoned plans to build out its Boost mobile phone network, opting instead to sell around a third of its spectrum to larger peer AT&T (not in our Focus List). The decision removes a potential customer for US tower companies.

The best performing infrastructure region was Japan (+13%). The country’s utilities and transport infrastructure stocks rallied on positive investor sentiment towards the broader Japanese market, following a trade agreement between Tokyo and Washington. The worst performing infrastructure region was Asia ex-Japan (-2%), owing to lacklustre returns from the region’s airports and port stocks.

Fund performance

The Fund returned +1.0% after fees in August, -52bps behind the FTSE Global Core Infrastructure 50/50 Index (USD, Net TR).

The best performing stock in the portfolio was Motiva (+19%), Brazil’s largest toll road operator, which rallied on reports that the process of selling its airport assets remained on track and may be decided before the end of the year. The company plans to sell its portfolio of 20 Latin American airport assets to a consortium of airport operators and financial investors, with a rumoured valuation between R$10 and R$12 billion (US$1.8 and US$2.2 billion).

Australian peer Transurban (+6%) gained after reporting solid June quarter earnings results, supported by disciplined cost management and lower interest expenses. The company also guided to a 6% dividend increase for next financial year and noted constructive progress on New South Wales toll reform discussions.  PINFRA (+6%), which operates a portfolio of Mexico City-focused toll roads, rose after announcing that US$300 million – approximately half of the after-tax proceeds from its recent sale of its Altamira port business – would be distributed as special dividends.  Australian-listed Atlas Arteria (+3%), whose main asset is a stake in French motorway network APRR, also performed well as investors shrugged off recent concerns about French political uncertainty to focus instead on the company’s flexible balance sheet and takeover optionality.

Airport operator Japan Airport Terminal (+11%) climbed on investor recognition of its attractive valuation multiples following a period of underperformance earlier in the year, while broader Japanese market strength provided an additional tailwind.  Flughafen Zurich (+6%) gained after the Swiss operator announced better-than-expected June quarter earnings, supported by effective cost control and healthy passenger numbers. The company expects to surpass its 2019 record of 31.5 million passengers in 2025.  Groupe ADP (+6%) also rose following favourable regulatory developments for Marseilles Airport. While the airport is government-owned, the news may have positive implications for the regulatory frameworks governing Groupe ADP’s Paris airports – Charles de Gaulle, Orly and Le Bourget.

The portfolio’s US utility holdings delivered mixed returns. California’s PG&E (+8%) increased after its CFO noted that the company would not need to raise equity to finance its current five-year, US$63 billion capex plan. Key expenditure items include grid modernisation and wildfire mitigation. Renewables-focused AES Corp (+4%) moved higher on the view that strong growth in US power demand would help offset potential headwinds from anti-renewables policies under the Trump administration. However Public Service Enterprise Group (-8%), New Jersey’s primary electric and gas utility, underperformed on concerns for political risk after the Democrat candidate for New Jersey governor pledged to freeze regulated pricing for the state’s utilities. Eversource Energy (-3%) fell after the Bureau of Ocean Energy Management issued a ”stop work” order for the Revolution Wind farm, located off the New England coast. Eversource has sold its stake in the project but remains responsible for additional cost increases.

The worst performing stock in the portfolio was Brazil freight rail operator Rumo (-12%), which operates freight rail networks that transport agricultural goods from the country’s inland regions to its coastal ports. The stock fell after reporting mixed June quarter earnings results, with soft pricing and a decline in market share partly offset by strong margins. On a longer-term view, the company remains well placed to benefit from Brazil’s rising agricultural production levels.

US-listed tower stocks SBA Communications (-8%) and American Tower (-2%) underperformed on investor concerns that customer churn rates (the proportion of departing customers) may be higher than previously anticipated, following the news of EchoStar’s spectrum sale to AT&T. China Tower (+7%), which operates over 2 million tower sites across China, fared better after delivering solid June quarter earnings and raising its interim dividend by a more-than-expected 22%.

Fund activity

The portfolio initiated a position in US-listed freight rail company Union Pacific, which currently operates a 50,000km+ mile track network serving the western half of the United States, with links to Canada and Mexico. Led by a respected management team, the company has scope to deliver healthy earnings growth via a combination of operational improvements and organic growth. Adding to the appeal of the stock, Union Pacific recently announced plans to merge with east coast peer Norfolk Southern. Assuming its approval by the regulator, this transaction would give Union Pacific a transcontinental track network linking the US east and west coasts and provide additional scope for efficiency improvements, as well as making it one of the country’s largest industrial companies by market capitalisation.

British water utility United Utilities, which provides water and sewerage services to 1.6 million customers across Northwest England, was added to the portfolio. Under the current regulatory period (2025-2030), UU is expected to grow its rate base at a 7% cagr, meaningfully higher than prior periods. Coupled with investment plans to reduce spills, this should see strong growth in earnings and improved confidence in the unloved UK water sector.

A holding in Canadian freight rail operator Canadian Pacific was divested. The stock has proved resilient against a backdrop of ongoing US tariff uncertainty. However, we now believe that greater mispricing opportunities and stronger long term growth prospects can be found amongst US peers. US mobile tower operator Crown Castle was sold after ytd share price gains and outperformance relative to peers moved the stock to a lower ranking within our investment process. A position in UK water utility Severn Trent was divested on the view that other names within the UK water sector currently display greater levels of mispricing.

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 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 31 August 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.

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