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Strong Fundamentals Support Utilities Outperformance

June 30, 2022

 

Portfolio Manager Daniel Chu outlines the main drivers of infrastructure returns in the second quarter of 2022 and weighs in on the factors impacting infrastructure sectors across the globe. He also highlights how the risk/return attractiveness of listed infrastructure is beginning to tilt toward utilities from more economically sensitive user-pays assets, as recovery on toll roads, commuter rail and airports is impacted by recessionary pressures.

Related Perspectives

Establishing Conditions for Stronger Future Earnings
Global Infrastructure Value 3Q26: Utilities generally recover prudently incurred costs such as higher interest rates as regulators recalibrate allowed returns to reflect prevailing financing conditions.
Utilities Look Attractive as Rates Rise
Global Infrastructure Income 3Q26: Regulated rate-base growth, electrification, grid investment and data center demand support infrastructure, with inflation-linked tariffs and contractual escalators helping preserve real asset values over time.
Megaprojects: A Cross-Sector Industrial Capex Cycle
An industrial capex cycle for LNG infrastructure, semiconductors, manufacturing reshoring and grid modernization remains in its early stages.
Freight and Travel Rebound Lifts User-Pays Assets
Global Infrastructure Value 2Q26: Airports and toll roads rose as easing tensions laid the groundwork for an increase in global travel, while a freight recovery helped rail.
Infrastructure Positive but Trails in Risk-On Quarter
Global Infrastructure Income 2Q26: Listed infrastructure made positive gains, led by user-pays assets such as airports and rail in a risk-on environment of easing geopolitical tensions.
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  • Past performance is no guarantee of future results. Copyright © 2022 ClearBridge Investments. All opinions and data included in this commentary are as of the publication date and are subject to change. The opinions and views expressed herein are of the author and may differ from other portfolio managers or the firm as a whole, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. This information should not be used as the sole basis to make any investment decision. The statistics have been obtained from sources believed to be reliable, but the accuracy and completeness of this information cannot be guaranteed. Neither ClearBridge Investments, LLC  nor its information providers are responsible for any damages or losses arising from any use of this information.

  • Performance source: Internal. Benchmark source: Morgan Stanley Capital International. Neither ClearBridge Investments, LLC nor its information providers are responsible for any damages or losses arising from any use of this information. Performance is preliminary and subject to change. Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent. Further distribution is prohibited. 
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