ClearBridge Global Infrastructure Income Strategy Q4 2024 Commentary

2025-01-20 08:15:00 ET

Summary

• ClearBridge is a leading global asset manager committed to active management. Research-based stock selection guides our investment approach, with our strategies reflecting the highest-conviction ideas of our portfolio managers.
• Listed infrastructure trailed global equities in the fourth quarter as potentially reflationary policy from the Trump administration, such as tariffs, as well as slight upticks in inflation, put some upward pressure on interest rates.
• North American gas and energy infrastructure was the top contributor to portfolio performance, while more rate-sensitive renewables and communication towers declined; disappointed with the pace of growth in carrier capex in the current 5G cycle, we reduced our towers exposure.
• We are tilted somewhat defensively, toward utilities, though not purely for reasons of defense, as many have very strong growth profiles, particularly in the U.S., driven by AI data center power demand, industry decarbonization and resiliency spending.

By Daniel Chu, CFA, Charles Hamieh, Shane Hurst & Nick Langley

High-Growth Utilities Bolster Defensive Tilt

Market Overview

Infrastructure traded down in the fourth quarter along with most broad global equity indexes. Economic news was mixed, as a boost in animal spirits following the U.S. presidential election and a third interest rate cut for the year came amid strong economic data that began to support the case for a slower easing cycle from the Federal Reserve than had been expected. This, along with potentially reflationary policy from the Trump administration, such as tariffs, as well as slight upticks in inflation, put some upward pressure on interest rates, causing some market weakness. U.S. equities, in particular growth segments, made gains, while global indexes were generally weaker, as were income-oriented and rate-sensitive sectors across the board....

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