Pursuing long-term growth and thematic tailwinds

We remain undeterred in our pursuit of long-term growth in an asset class exposed to multiple thematic tailwinds. Renewable energy, digital connectivity and demographics, to name but a few, are powerful, enduring themes, which we believe will support strong growth for many decades to come. 

Market environment YTD

Despite ongoing concerns about persistent inflation, rising interest rates and the prospect of a recession, equity markets have confounded the sceptics with a strong rally, albeit confined to a select few sectors. The dominance of technology and the new economy has left everything else in its wake, creating a difficult environment for anything other than growth-focused portfolios exposed to a narrow field of winners. Champions of the digital era, particularly those associated with artificial intelligence (AI), hogged the limelight. NVIDIA's guidance exceeded the most bullish of expectations, but the euphoria has also
rekindled more worrying elements of investor behaviour. Speculation is back, with the GS Non-Profitable Tech Index (also referred to as the "negative earnings" company index among market participants) up 15% in May.

The style rotation away from value and defensives, which proved resilient in 2022, towards growth, which flourished during the halcyon days of low growth and low interest rates, has provided a significant headwind for listed infrastructure as an asset class. Utilities, which typically dominate listed infrastructure portfolios, have declined in a rising market as investors shun perceived sensitivity to changes in interest rates.