ASGI Surges Past S&P 500 with Strong Total Returns

The abrdn Global Infrastructure Income Fund (ASGI) has delivered strong total returns since the last update, outperforming the S&P 500 Index. Despite the benchmark's slight decline, ASGI's success is notable.

The Abrdn Global Infrastructure Income Fund (ASGI) has demonstrated robust performance in the first quarter of 2025, significantly outperforming the S&P 500 Index. Despite the benchmark's slight decline, ASGI's total returns have been impressive, showcasing the resilience of the infrastructure sector in volatile market conditions.

Key contributors to ASGI's strong performance include individual stocks such as IHS Towers, Eiffage, and RWE. IHS Towers, an African tower company, reported positive earnings, suggesting a recovery from disruptions in Nigeria and increased confidence in telecommunications operators' capital expenditure. Eiffage, a European toll road operator, benefited from Germany's €500 billion infrastructure spending plan, which is expected to boost the company's growth prospects. RWE, a European electric utility, benefited from both the German stimulus bill and its announcement of cuts to renewable capex, leading to higher returns for shareholders.

However, some individual stocks detracted from the overall performance. XPLR Infrastructure announced a strategic review that included suspending the dividend and providing no growth projections until 2030, which negatively impacted investor sentiment. EDP Renováveis and Mobico Group also faced challenges due to concerns about potential cuts to the Inflation Reduction Act in the US and the weakening power price environment in Europe, respectively.

The global equity markets ended lower over the quarter, reflecting investor optimism initially followed by concerns about tariff policies and their impact on economic growth. The US Federal Reserve and other central banks maintained a data-dependent stance, cutting interest rates from mid-2024, but the pace of easing slowed as the quarter progressed. Tariffs introduced by the US government were seen as more inflationary and detrimental to growth than expected, leading to a broad-based downward repricing of global growth.

The outlook for infrastructure remains positive, particularly for high-quality companies with robust financial positions and structural growth tailwinds. Infrastructure assets, such as utilities, telecommunications towers, and natural gas pipelines, are less exposed to tariff-driven cost fluctuations due to their regulated or contracted revenue models. This resilience makes infrastructure an attractive investment opportunity in an uncertain macroeconomic environment.

Investors should remain vigilant about the long-term structural drivers in infrastructure, including the energy transition, digital acceleration, ageing infrastructure, and increasing urbanisation. These factors continue to provide a compelling case for investing in infrastructure, despite near-term market volatility.

References:
[1] https://seekingalpha.com/article/4791187-abrdn-global-infrastructure-income-fund-q1-2025-commentary