The Fund recorded a loss of 2.99% in August (C Accumulation GBP) as the broader UK-listed infrastructure sector softened over the summer, giving back some of the recent positive performance. The Bank of England reduced interest rates from 4.25% to 4.00%, marking the fifth 25bps cut to interest rates since policy pivoted in August 2024. However, longer-dated gilt yields moved higher over the course of the month on concerns surrounding the UK government’s spending plans and fiscal policy.

While the upwards shift in UK reference yields was undoubtedly a key headwind to performance, the Fund’s exposure to renewable energy generators suffered following a poor reporting period. Broadly speaking, second quarter NAV updates were negatively impacted following reductions to forecast power price curves. Meanwhile, power generation from wind assets came in under budget owing to very poor wind resource during the period, but robust irradiation resource meant that the operational performance of solar-focused generators was relatively better.

Updates from a number of REITs held within the portfolio were more positive. Target Healthcare provided a final update before its full year results expected in September. EPRA Net Tangible Assets increased 1.6% to 114.8p in the company’s financial fourth quarter, driven by valuation uplifts and capital returns from a disposal. Net LTV decreased marginally to 21.8%. Tritax BigBox reported a strong first half period, with rental growth driving a 6.4% increase in adj. earnings per share. Assets from the UKCM transaction have been fully integrated and non-core disposals are on track. The company reiterated its “potential to deliver earnings growth of 50% by the end of 2030 and superior risk-adjusted returns to shareholders” via 3 key drivers: (1) capturing record rental reversion, (2) developing best in class logistics assets (the company has 2.5m sq. feet of logistics space under construction and made 1.1m sq. feet of development starts in H1 2025), (3) Data Centres targeting “exceptional returns".

HICL provided an Interim Update for the period from 1 April 2025 to 15 August 2025, stating that “Portfolio cash generation remains in line with expectations, supporting our confidence in meeting our dividend guidance for the financial years to 31 March 2026 [8.35p] and 2027 [8.5p].” The return to dividend growth is expected to be supported through a resumption of cash receipts from HICL’s investment in Affinity Water, which is anticipated to occur during the financial year ending 31 March 2026. In terms of outlook, HICL noted that “free cash generation continues to trend upwards, underpinned by stable investment performance and a portfolio that is well insulated from macroeconomic volatility” while also noting the potential for investment opportunities resulting from the government’s 10 Year Infrastructure Strategy.

Traditional equity exposures within the Fund, which includes companies operating in the utilities, telecoms and energy transmission sectors, have generally performed well year-to-date. Vodafone was the best individual performer in August (+7.73%) and has also been the best performing security in the portfolio year-to-date.

The merger of Primary Health Properties and Assura Group took effect during the period, resulting in a larger singular exposure to the combined entity within the Fund. The Investment Manager is positive towards the outlook for the enlarged group, which provides exposure to a broader platform of critical healthcare facilities.