Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure delivered mixed returns in July, despite healthy quarterly earnings results. The best performing infrastructure sector was Railroads (+6%), driven by strong earnings from North American freight rail operators and gains among Japanese passenger rail companies.    

The worst performing infrastructure sector was Airports (-3%). European airport operators delivered mixed returns as tensions between the US and Iran escalated, while underwhelming earnings and the lack of a hoped-for FIFA World Cup-related boost to passenger numbers weighed on Mexican peers.

The best performing infrastructure region was Japan (+5%), reflecting pleasing gains across its passenger rail and airport stocks. The worst performing infrastructure region was Latin America (-5%), where Mexican airport underperformance more than offset positive returns for Brazil’s road and rail stocks.

The strategy 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.

The asset class remains supported by several structural growth drivers. Electric utilities face rising capital expenditure requirements as Artificial Intelligence (AI) adoption and data centre growth drive substantial increases in electricity demand. As well as adding power generation capacity, utilities are investing to expand, modernise, and strengthen their electricity transmission and distribution grids. Under the US regulatory model, this increased capital investment typically translates into rate base growth, which in turn supports earnings growth. While policymakers are responding to concerns about the potential impact on customer bills, we believe the long-term opportunity for utilities remains substantial. US utilities are also seeking to address these concerns through measures such as large-load tariffs – specialised pricing structures designed for high-capacity users.

Digitalisation remains another key theme for the asset class. Data centers continue to benefit from companies migrating IT equipment from on-premises environments to co-location facilities and cloud-based platforms, attracted by greater flexibility, scalability, and reliability. Additionally, the surge of interest in AI is driving data center demand, as well as increasing demand for electricity.  We expect structural growth in demand for mobile data, underpinned by increasing reliance on digital connectivity, to support steady revenue growth in the mobile tower sector. Consolidation activity within the telecom sector (mobile towers’ primary customer base) has raised concerns about tenant churn rates; however, longer-term growth drivers remain.

Airports appear well-positioned to benefit from the ongoing drivers behind global travel demand growth, including wealthy baby boomers with disposable income to spend on travel during their retirement, Gen Z prioritising experiences over possessions, and the expansion of middle-class populations in Asia and Latin America. While sentiment towards the sector has been affected by the ongoing conflict between the US and Iran, we believe the magnitude of the earnings impact is likely to be less severe than current market pricing implies. 

Source: Bloomberg and First Sentier Investors as at 31 July 2026.