Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure held up relatively well as Middle East conflict drove investors towards defensive assets. The best performing infrastructure sector was Energy Midstream (+5%), which gained as energy prices were driven higher by Iran-imposed restrictions on passage through the Strait of Hormuz and strikes on Persian Gulf energy processing and export facilities. Defensive infrastructure sectors such as Water / Waste (-1%) and Utilities / Renewables (-2%) also performed relatively well in this environment.

The worst performing infrastructure sector was Towers / Data Centres (-10%). US tower operators were affected as bond yields were pushed higher by mounting inflation concerns. Airports (-6%) fell on the view that passenger volumes may be affected by the crisis; both directly as Middle East airlines faced disruption and flight cancellations; and more broadly if higher fuel costs feed through to higher airline ticket prices and dampen longer-term demand.

The best performing infrastructure regions included the United States (-1%), owing to robust performance from its energy midstream and utility stocks. The worst performing infrastructure region was Asia ex-Japan (-7%), on concerns that it may prove vulnerable to the effects of tightening energy markets.

The Fund returned -1.7% after fees in March¹, +54 basis points ahead of the FTSE Global Core Infrastructure 50/50 TR Index (SGD).    

The best performing stock in the portfolio was US Liquefied Natural Gas (LNG) exporter Cheniere Energy (+20%), which is well-positioned to benefit from disruption to Persian Gulf LNG. The extensive damage sustained by Qatari facilities could present opportunities for Cheniere to sign additional long-term supply contracts. At the margin, higher LNG prices are likely to provide a favourable environment to sell uncontracted natural gas capacity into global energy markets.

US energy midstream stocks ONEOK (+9%) and Targa Energy (+4%) also performed well on the view that recent events are likely to support higher production levels from North American oil and gas companies, leading in turn to increased demand for the energy transportation and storage services that midstream companies provide.

Regulated US utilities also held up well. Resilient performers for the month included Sempra (+2%), whose businesses include regulated Californian electric and gas utilities and fast-growing Texas transmission utility Oncor. The company also owns a minority stake in energy-focused Sempra Infrastructure, whose assets include Cameron LNG, a Louisiana LNG export facility that may benefit from tighter global energy markets. Duke Energy (flat), one of the largest regulated US utilities by market capitalisation with a southeast US-focused service territory, was supported by the appeal of its predictable earnings profile and defensive business model. NextEra Energy (-1%) was buoyed by early reports that the company had been selected to build and operate substantial new gas-fired power plants in Texas and Pennsylvania, to help meet electricity demand from new data centres. The plants, which are part of the recent trade agreement between the US and Japan, will be jointly owned by the two countries.

UK electric utility National Grid (-9%) and water utility United Utilities (-6%) fared less well. Both stocks lagged as UK gilt yields spiked in March, reflecting concerns that higher energy prices were likely to put upward pressure on inflation and therefore on interest rates. UK utilities stable cash flows and high dividend yields make these companies sensitive to changes in bond yields.

European airport operators including Groupe ADP (-12%) and Flughafen Zurich (-6%) lagged on concerns that the Middle East crisis may reduce passenger volumes at their French and Swiss airports. Given that the Middle East accounts for just ~5% of passenger volumes for both companies, these share price moves appear to have been an over-reaction. Spanish airport operator AENA (-4%) held up better than peers, aided by lower exposure to Middle East traffic, and by the view that British, French and German tourists may now view Spain as a preferable holiday destination compared to the eastern Mediterranean region.

US-listed mobile tower operators SBA Communications (-14%) and American Tower (-10%) were also affected by the rise in bond yields during the month, along with lingering concerns for the sector’s growth outlook. Data centre operator Equinix (+1%) performed well in March, reflecting continued AI-driven demand for data centre access. At a recent meeting with peer Digital Realty (+2%, not held), management struck a confident tone when discussing near term growth prospects, noting that demand from its customers was “palpable”.

¹ Fund performance is based on the Singapore unit trust, net of fees, expressed in SGD terms.
All stock and sector performance data expressed in local currency terms. Source: Bloomberg.

A holding in regulated US utility Eversource Energy was divested during the month, after a decision by the federal utility regulator Federal Energy Regulatory Commission (FERC) to reduce the allowed rate of return for New England transmission operators – including Eversource – made the stock a less compelling investment opportunity from a valuation perspective.   

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.

As unfolding events in the Middle East continue to buffet financial markets, global listed infrastructure appears relatively well placed thanks to its essential service provision, domestic market focus and lack of direct exposure to the region. The asset class has delivered pleasing year-to-date returns, both in absolute terms and relative to global equities. We remain cautiously optimistic about its future prospects, owing in part to the long-term structural growth drivers that the asset class is positioned to benefit from.

Electric utilities, particularly in the US, face higher capital expenditure needs to meet the substantial increases in power demand. As well as building additional power plants, utilities also need to expand, modernise and strengthen electricity transmission and distribution grids. Under US utility regulation, higher amounts of capex spent in this way typically leads to rate base growth, which ultimately supports higher earnings growth.

Digitalisation is another key theme for the asset class. Data centers benefit from companies seeking the improved reliability and flexibility offered by migrating IT equipment from on-premises to a combination of colocation services and cloud computing. Additionally, the surge of interest in AI is driving data center demand, as well as boosting the need 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. The adoption of 5G technology over coming years will require networks to handle increased data speed, lower latency, and a much higher number of connected devices.

The airport sector is well-positioned to benefit from the ongoing drivers behind global travel demand growth; wealthy baby boomers with money to spend on travel during their retirement, Gen-Z prioritizing experiences over possessions, and growing middle classes in Asia and Latin America. While airports lagged in March, we believe the magnitude of the earnings impact is likely to be less than market pricing currently reflects. As a result, we have held our overweight position and looked to selectively add to the sector to capitalise on mispricing opportunities. 

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