Insights

Portfolio Manager Eric Bright discusses how the Fund is invested as we begin 2025, new areas of portfolio interest, and why investors should consider adding infrastructure stocks to their diversified portfolio.

How is the Cromwell Foresight Global Sustainable Infrastructure Fund’s portfolio structured as we enter 2025?

The Fund seeks publicly traded companies that own and operate underlying physical infrastructure assets. Currently, the portfolio is divided equally into three primary groups:

• Digital Infrastructure - 5G, cloud computing and artificial intelligence require denser networks of cell towers, fiber networks and data centers.
• Diversified Infrastructure - The need to promote economic growth, improve quality of life for citizens, and address societal challenges such as population growth, requires more investment in roads, schools and healthcare.
• Renewables - Powering artificial intelligence (AI), decarbonization, electrifying processes, and improving energy security require greater generation of electricity and improved distribution.

We believe the Fund offers investors an opportunity to invest in infrastructure companies with high-quality, defensive earnings and a lower correlation to the broader market.

Are you seeing any new areas of interest in Infrastructure?

Specifically, we see two new areas of opportunity developing. One is in power grids that own and operate transmission networks to distribute electricity to homes. In the third quarter of 2024, the Fund purchased Utility company National Grid, which delivers electricity, natural gas, and clean energy to millions of people in the U.S. and U.K. Grid owners need support from regulators to invest capital in their wires and pylons that transport much needed energy and, consequently, earn a set return. With increased energy demand driven from artificial intelligence use, we expect regulators to support grid utilities, creating an environment that could allow for attractive investment returns.

In addition, we have been closely monitoring the transport infrastructure stocks. With many investors concerned about the Trump administration’s possible tariff actions, some rail companies have sold off since tariffs would affect goods that move across the U.S. border by rail. Many of these businesses have long and successful operating histories. While they do experience some occasional volatility, fundamentally they are critical to moving goods within and between the U.S., Canada and Mexico. Depressed valuations in the sector could present an opportunity for the Fund to increase its exposure to the sector.

Why invest in global infrastructure assets in 2025?

We believe companies that own and operate physical infrastructure assets offer the following potential benefits:

1. Attractive valuations. Particularly in Renewable Energy and Tower companies, many infrastructure companies appear to be currently out of favor given the recent sentiment around interest rates. We believe the companies we hold in the portfolio have healthy levels of cash flow and run high-quality businesses.
2. Potential earnings surprises. We believe data centers could be set for a strong 2025 from a performance perspective as we are only seeing the beginnings of artificial intelligence deployments.
3. Lower correlation. Real assets tend to have a lower correlation to the overall market. Since inception in January 2023 through December 2024, the Fund had a low correlation to the overall U.S. and global market as well as global infrastructure stocks.