The strategy of the Fund is to invest in a globally diversified portfolio of best-in-class, next generation real estate and infrastructure companies that are listed in developed markets. These companies are likely to benefit from the digitalisation of economies, changing the way we work, live and play.

The Fund currently invests in 32 listed infrastructure companies operating at the intersection of real estate and technology. These companies own physical infrastructure assets that are vital to the functioning of the digital economy and are active in four specialist sub-sectors: logistics warehouses supporting e-commerce (49.3% portfolio weight), data centres (26.0% portfolio weight), mobile communication towers (19.0% portfolio weight), and networks (3.9% portfolio weight).  

Over the course of the month, the Fund performed positively, with NAV increasing by 1.6% (C Acc GBP). Since launch, NAV has increased by 4.8% (C Acc GBP). In comparison, the global real estate index has increased by 9.8%* During February, the data centres sub-sector performed best, delivering 7.0%**. The cell towers and networks sub-sectors also performed positively, delivering 5.4%** and 2.8%** respectively. The logistics sub-sector delivered negative returns, falling by 1.5%**.

Growth concerns re-emerged during the month on the back of the new US administration’s policy agenda. US manufacturers reported steep declines in new orders and employment in February, fuelling fears the economy was losing momentum on the back of falling growth expectations. Consumer confidence also fell the most since August 2021, according to Consumer Confidence Index data. While President Trump’s 25% tariffs on Mexico and Canada were delayed in February (before being implemented at the start of March), uncertainty over the tariffs weighed on growth concerns , with rising concerns about the inflationary impact of the levies.

Despite the uncertain macro-economic environment, the towers sub-sector benefited from the decline in interest rates , which, alongside strong results announced by several companies in the sector, contributed to the Fund’s positive performance in February. American Tower, (portfolio weight 4.4%), a US based REIT which owns, develops and operates communications infrastructure, announced property revenues of $2,484 million in Q4, up 2% year-on-year, along with organic tenant billings growth of 5% in Q4. Also in the towers sector, SBA Communications (portfolio weight 4.7%), a REIT which owns and operates communications infrastructure, announced domestic rental growth of 2.2% and international rental growth of 1.7%. With c.18,000 sites in their domestic portfolio and c.22,000 sites in their international portfolio, SBA announced that c.50% of their sites have been upgraded with 5G gear. This was driven by increased data consumption, the deployment of fixed wireless access and coverage commitments. “Carrier activity levels in the US continued to grow and we finished 2024 with our highest backlog of the year for both leasing and services, setting us up well for continued momentum in 2025," said Brendan Cavanagh, President and Chief Executive Officer of SBA Communications.

In the data centres sub-sector, SUNeVision (portfolio weight 1.9%), a Hong-Kong based data centre real estate company, delivered a return of 130% in February. This followed the announcement that Chinese AI start-up DeepSeek had optimised existing hardware and trained its open-source AI model at a fraction of the cost incurred by competitors, propelling China forward in the AI race. This sparked a broad-based tech rally in China and Hong Kong, with the Hang Seng Tech Index rallying over 80% in local currency terms in February. SUNeVision emerged as a significant beneficiary of the AI boom, with its portfolio data capacity expected to double by the end of the year. It also boasts the largest capacity coming to market compared to its peers.

Despite the fall in logistics performance in February, there was significant onshoring and nearshoring potential announced for logistics companies in the Fund’s portfolio. LXP, (portfolio weight 2.0%), an owner, developer and operator of US logistics real estate, announced they have more than 80 large-scale projects worth over $100 million in the pipeline, with industrial real estate demand benefitting from new manufacturing facilities and population and job growth across markets.

In addition, a key theme discussed on earnings calls in the month was capital expenditure (CapEx). With many of America’s largest technology companies announcing their earnings in February, a significant proportion of their CapEx is going towards the building and leasing of data centres. Due to the large amount of CapEx required for cloud computing and AI, the Investment Manager expects it to translate into healthy rental growth for data centre companies in the Fund’s portfolio over the coming years.

The Investment Manager maintains a positive outlook on the digital infrastructure sector, primarily due to the strong performance of underlying portfolio assets. This, combined with increased CapEx and nearshoring opportunities available in the sector, further reiterates the growth inherent to the digital infrastructure sector. As such, the digital infrastructure sector remains a key investment area for any investors seeking long-term returns.

*MSCI World IMI Core Real Estate IMI GBP
**Defined as the calendar month, as opposed to the valuation month