Insights

In the following commentary, Portfolio Manager Eric Bright talks about current themes shaping the infrastructure market, the Fund’s low correlation to U.S. equities, and a new portfolio position.

Would you please summarize the global infrastructure market during the second quarter of 2026?

Over the past quarter, three themes have driven interest in infrastructure sector:

1. Heightened geopolitical tensions: Due to the conflict in the Middle East and disruption in the energy markets, governments are placing greater emphasis on investing in critical infrastructure to strengthen energy security, supply chains, and economic resilience.
2. Low obsolescence: Artificial intelligence (AI) is expected to reshape many industries, but the world will continue to rely on essential infrastructure such as power grids, utilities, transportation networks, and communications assets. We believe the underlying assets remain critical to the functioning of the economy, supporting durable demand over the long term.
3. Defensive characteristics: Many investors are increasingly seeking companies that own essential physical assets with stable cash flows and lower sensitivity to economic cycles.

We believe these themes have resulted in a broader set of opportunities for the portfolio across digital, utilities, energy and power, transportation, and health care infrastructure subsectors.

How does the Fund evaluate opportunities in AI-related companies?

The AI theme has generated significant investor enthusiasm, driving strong performance among companies viewed as direct beneficiaries. Rather than following short-term market leadership, we remain focused on companies that own and operate essential physical infrastructure assets.

We believe investors who allocate to infrastructure are seeking resilient businesses with durable cash flows and differentiated portfolio characteristics. In fact, over the past three years, the Fund’s correlation to the S&P 500 Index has ranged from 0.21 to 0.63, demonstrating that infrastructure has behaved differently from the broader equity market. That differentiated return profile can provide portfolio diversification, particularly during periods of heightened market volatility.

Would you please discuss a new position that was added to the Fund in the second quarter?

In 2Q, we added Xcel Energy, a $50 billion U.S. utility with regulated electricity generation, transmission and distribution assets across the Midwest and Southwest.

We believe Xcel Energy combines the defensive characteristics of essential infrastructure with attractive long-term growth. The company is executing a significant capital investment program of around $60 billion focused on grid modernization and the transition to cleaner energy. It should also benefit from rising electricity demand linked to electrification, industrial growth and emerging data center development across its service areas. Overall, we believe Xcel combines defensive regulated infrastructure characteristics with attractive growth from long-term electricity system investment.