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Ben discusses key contributors including Atlas Arteria, Dominion Energy and airport holdings, as well as the underperformance of communications infrastructure. Ofer covers the portfolio's exposure to AI-driven power demand through utilities, explains the decision not to invest in data centres and outlines the 12-month outlook, including expectations for lower inflation, easing long-term rates and continued strong underlying asset class dynamics.
Key takeaways
The portfolio delivered resilient performance during a volatile quarter marked by the Iran-US conflict, AI capex swings and inflation concerns, reflecting the defensive and reliable cash flow characteristics the strategy is built around.
Key contributors included Atlas Arteria (subject to an IFM takeover bid), Dominion Energy (subject to a NextEra acquisition), airport holdings where traffic proved more resilient than feared, and Canadian National Railway.
Communications infrastructure (mobile tower businesses) underperformed on inflation and rate sensitivity concerns, despite no change to underlying cash flows. The team view the sector as increasingly attractive.
The portfolio benefits from AI-driven power demand through regulated utilities, which earn a fair return on additional capex investment and are well protected in the event of an AI industry shakeout.
Data centres have been assessed multiple times and excluded from the portfolio due to concerns around cash flow duration, competition from hyperscalers who are also their largest customers, and technological risk, all of which are inconsistent with the infrastructure investment framework.
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