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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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A monthly review and outlook of the Global Listed Infrastructure sector.
Market review - as at May 2025
The Global Listed Infrastructure asset class built on recent gains as US tariff concerns continued to recede. The best performing infrastructure sector was Other (+13%), higher risk stocks that we screen from our Focus List. Emerging Markets port stocks rallied on relief that US tariff measures may be less stringent than originally feared, after the US and China agreed to a 90-day pause on reciprocal tariffs. Railroads (+7%) also gained, with North American freight rail stocks supported by a brightening outlook for haulage volumes.
The worst performing infrastructure sector was Towers / Data Centres (-4%). Having delivered strong YTD gains, large-cap US tower stocks gave up ground as bond yields rose.
The best performing infrastructure region was Latin America (+6%), aided by robust returns from its airport stocks. The worst performing infrastructure region was Japan (-1%), whose electric utility stocks lagged as investors favoured higher beta assets.
Market outlook and Strategy
The Portfolio 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.
Financial markets have quickly shrugged off the tariff concerns sparked by Trump’s “Liberation Day” announcement in early April. However, rising trade costs are still expected to reduce global economic growth rates and push inflation higher. Listed infrastructure would likely hold up well in the face of these potential headwinds, owing to its essential service provision, regulated / contracted cash flows and relatively modest valuation multiples.
The asset class also remains supported by several structural growth drivers. Electric utilities, particularly in the US, face higher capital expenditure needs to meet the increases in electricity demand being driven by AI, data centres, onshoring of manufacturing and electrification. While additional equity will be needed to fund some of this capex, this theme should also enable the sector’s Earnings per Share growth to accelerate from a typical range of between 3% and 5% per annum to between 5% and 8% per annum, representing a meaningful positive shift.
This rising demand is also likely to bolster the need for natural gas, which has a crucial role to play in maintaining energy reliability and affordability. As well as benefitting utilities, this is also likely to drive additional demand for North American energy transportation, storage and export assets, presenting energy midstream companies with new opportunities to invest and grow.
Digitalisation is another key theme for the asset class. We expect structural growth in demand for mobile data (underpinned by an ever-growing reliance on digital connectivity) to support long-term earnings growth for Towers. The adoption of 5G technology over coming years will require networks to handle increased data speed and lower latency as well as a much higher number of connected devices. The surge of interest in AI is driving data center demand, as well as boosting the need for electricity.
Source : Company data, First Sentier Investors, as of 31 May 2025.
Global Listed Infrastructure
Infrastructure powers the world we live in – and when it comes to on-the-ground research, our team can be found on site
Investing in global listed infrastructure can offer inflation-protected income and steady capital growth from real assets delivering essential services. We search for best-in-class assets worldwide with high barriers to entry, structural growth and pricing power.
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