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Important Note Click to maximise

This is a financial promotion for The First Sentier Global Listed Infrastructure Fund. This information is for professional clients only in the EEA and elsewhere where lawful. Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Currency risk: the Fund invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the Fund and could create losses. Currency control decisions made by governments could affect the value of the Fund's investments and could cause the Fund to defer or suspend redemptions of its shares.
  • Single sector risk: investing in a single economic sector may be riskier than investing in a number of different sectors. Investing in a larger number of sectors helps to spread risk.
  • Listed infrastructure risk: the infrastructure sector and the value of the Fund is particularly affected by factors such as natural disasters, operational disruption and national and local environmental laws.
  • Concentration risk: the Fund invests in a relatively small number of companies which may be riskier than a fund that invests in a large number of companies.
  • Emerging market risk: Emerging markets tend to be more sensitive to economic and political conditions than developed markets. Other factors include greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities.

For details of the firms issuing this information and any funds referred to, please see Terms and Conditions and Important Information. 

For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document for each Fund.

If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

Global Listed Infrastructure - Monthly Update - July 2022

Market review

Global Listed Infrastructure delivered strong returns in July, as lacklustre economic data sparked investor hopes that interest rate rises may increase  at a slower pace than previously assumed. The FTSE Global Core Infrastructure 50/50 index gained +4.7% while the MSCI World index^ ended the month +7.9% higher.

The best performing infrastructure sector was Railroads (+10%), with North American freight rail operators gaining on improved investor sentiment.  The establishment in the US of a Presidential Emergency Board, aimed at averting the risk of a national freight rail strike, was also positive at the margin. The Energy Midstream (+8%) sector climbed against an uncertain geopolitical backdrop. During the month, Russia’s state-owned energy company Gazprom reduced the amount of natural gas sent to Europe via the Nord Stream 1 pipeline, pushing gas prices higher and buoying North American Liquefied Natural Gas (LNG) exporters. The worst performing infrastructure sector was Toll Roads (flat). Having performed well during June’s market turbulence, the sector paused for breath in July.

The best performing infrastructure region was the United Kingdom (+8%) reflecting a rally in utilities/renewables stocks as wholesale power prices rose. The worst performing infrastructure region was Japan (-2%) as the prevailing “risk-on” mood saw investors favour higher beta sections of the market.  

Fund performance

The Fund returned +4.6% after fees1 in July, 5 bps behind the FTSE Global Core Infrastructure 50/50 Index (USD, Net TR).        

Annual Performance (% in USD) to 31 July 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. ^ 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 UK Funds Limited/Lipper IM. 

The best performing stock in the portfolio was Targa Resources (+16%), which processes and transports Natural Gas Liquids such as propane and butane for use in US and international markets. The stock benefitted from a supportive operating environment, characterized by strong commodity prices and robust volumes. Other holdings in the Energy Midstream space also outperformed. Liquefied Natural Gas exporter Cheniere Energy (+12%) announced two large new contracts to supply LNG to Asian counterparties over the next 20+ years. Gains for DT Midstream (+12%) reflected its relatively undemanding valuation multiples, and its exposure to the fast-growing Texas / Louisiana Haynesville shale gas basin.

Channel Tunnel operator Getlink (+16%) announced healthy earnings results for the first half of 2022. The easing of Covid-19-related border crossing and quarantine restrictions between Britain and France saw travellers return to its car and truck shuttle, and to the Eurostar passenger rail service. Company revenues were also boosted by its new ElecLink unit, a cable inside the Channel Tunnel which enables electricity exchange between the UK and France. US east coast freight railroad holdings CSX Corp (+11%) and Norfolk Southern (+11%) delivered pleasing returns. While June quarter earnings indicated that operational metrics remain challenged by labour shortages, both companies continued to demonstrate strong pricing power and expressed confidence in their ability to hire and train additional workers as the year progressed.

Danish renewables operator Ørsted (+14%) and UK electric utility SSE (+13%), whose assets include a growing offshore wind business, increased on the view that the current higher power price environment would be supportive of earnings. Leading US renewables developer and utility NextEra Energy (9%) was deemed to be one of the largest potential beneficiaries of the recently announced Inflation Reduction Act, which includes measures in support of renewables and low carbon energy sources. The measures are also likely to support other US utility holdings with substantial solar resources, such as Alliant Energy (+5%) and Xcel Energy (3%); and those whose generation fleets include a substantial nuclear component, such as Dominion Energy (+3%) and Entergy (+2%). 

The worst performing stock in the portfolio was China water utility Guangdong Resources (-8%) whose assets include the concession to supply water to Hong Kong until 2030. This decline was roughly in line with the performance of the main Chinese stock market, suggesting it was driven more by broader concerns such as the slowing Chinese economy, than by company-specific factors.

Having held up well during June’s volatile markets, several of the portfolio’s toll road holdings also underperformed. Chinese toll road operator Jiangsu Expressway (-7%) lagged as ongoing COVID-19 restrictions and slowing economic activity levels weighed on traffic volumes. Australian-listed Atlas Arteria (-4%) eased in the absence of fresh news related to its potential takeover by direct infrastructure manager IFM Investors. Mexican peer PINFRA (flat) also trailed rising markets, despite announcing robust June quarter earnings owing both to healthy traffic growth and higher tolls

Fund activity

The Fund divested its position in UK water utility Severn Trent after it traded up to valuation multiples where limited mispricing was evident; and on concerns that the current regulatory review process for UK water companies may affect sentiment towards the sector in coming months.

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.

Toll roads represent the portfolio’s largest sector overweight, via positions in European, Asia Pacific and Latin American operators. We believe these companies represent exceptional value at current levels, with traffic volumes proving significantly more resilient than those of other transport infrastructure assets. Toll roads are also likely to fare relatively well in a higher inflation environment. Many toll roads have concession agreements that specify how prices can be increased, with an option to follow the inflation rate or an agreed percentage – whichever is higher. 

The portfolio is also overweight Railroads, primarily via exposure to large cap North American freight rail operators. These firms are unique and valuable franchises. Their wholly-owned track networks are high quality infrastructure assets which can never be replicated. They typically operate under duopoly market conditions, with significant numbers of captive customers such as grain, chemical and auto producers giving them strong pricing power over long haul routes. Lack of capacity in the trucking sector (freight rails’ main competitor), along with the onshoring of industrial production back to the US, are expected to provide additional drivers of demand for these stocks.

A substantial portion of the Fund consists of high conviction Utilities / Renewables holdings. The Fund’s focus is on companies with the scope to derive steady, low risk earnings growth by replacing old fossil fuel power plants with solar and wind farms, and by upgrading and expanding the networks needed to connect these new power sources to the end user. Technology advances and lower costs for utility-scale battery storage will enable renewables to represent an ever-greater share of the overall electricity generation mix. In the medium term, the roll-out of electric vehicles is then expected to provide an additional boost to utilities – first via investment opportunities associated with linking EV charging stations to the grid; and then via higher overall demand for electricity. The Inflation Reduction Act, should it be signed into law, would represent a material tailwind for these themes within the US.

Underweight exposure to the Energy Midstream sector has been maintained. Strong gains across the sector during the past year have moved these stocks to lower rankings within our investment process; and we remain conscious of the structural headwinds that many of these companies may face as Net Zero initiatives gather pace.

Performance is based on VCC ID share class, net of fees, expressed in USD.    
^ MSCI World Net Total Return Index, USD.     
All stock and sector performance data expressed in local currency terms. Source: Bloomberg.  

Important Information

This document has been prepared for informational purposes only and is only intended to provide a summary of the subject matter covered and does not purport to be comprehensive. The views expressed are the views of the writer at the time of issue and may change over time. It does not constitute investment advice and/or a recommendation and should not be used as the basis of any investment decision. This document is not an offer document and does not constitute an offer or invitation or investment recommendation to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this document.

This document is confidential and must not be copied, reproduced, circulated or transmitted, in whole or in part, and in any form or by any means without our prior written consent. The information contained within this document has been obtained from sources that we believe to be reliable and accurate at the time of issue but no representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information. We do not accept any liability whatsoever for any loss arising directly or indirectly from any use of this information.

References to “we” or “us” are references to First Sentier Investors.

In the UK, issued by First Sentier Investors (UK) Funds Limited which is authorised and regulated by the Financial Conduct Authority (registration number 143359). Registered office Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB number 2294743. In the EEA, issued by First Sentier Investors (Ireland) Limited which is authorised and regulated in Ireland by the Central Bank of Ireland (registered number C182306) in connection with the activity of receiving and transmitting orders. Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, Ireland number 629188. Outside the UK and the EEA, issued by First Sentier Investors International IM Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registered number 122512). Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB number SC079063. 

Certain funds referred to in this document are identified as sub-funds of First Sentier Investors Global Umbrella Fund plc, an umbrella investment company registered in Ireland (“VCC”). Further information is contained in the Prospectus and Key Investor Information Documents of the VCC which are available free of charge by writing to: Client Services, First Sentier Investors , 1 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland or by telephoning +353 1 635 6798 between 9am and 5pm (Dublin time) Monday to Friday or by visiting Telephone calls may be recorded. The distribution or purchase of shares in the funds, or entering into an investment agreement with First Sentier Investors may be restricted in certain jurisdictions.

In the EU: This document is a marketing communication. The fund(s) mentioned here may or may not be registered for marketing to investors in your location. If registered, marketing may cease or be terminated in accordance with the terms of the EU Cross Border Distribution Framework.

Copies of the prospectus (in English and German) and key investor information documents in English, German, French, Danish, Spanish, Swedish, Italian, Dutch, Norwegian and Swedish, along with a summary of investor’s rights are available free of charge at

Representative and Paying Agent in Switzerland: The representative and paying agent in Switzerland is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich, Switzerland. Place where the relevant documentation may be obtained: The prospectus, key investor information documents (KIIDs), the instrument of incorporation as well as the annual and semi-annual reports may be obtained free of charge from the representative in Switzerland.

First Sentier Investors entities referred to in this document are part of First Sentier Investors a member of MUFG, a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of any investment or entity referred to in this document 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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