September, 2023
Equity markets worldwide retreated in the third quarter, as investors were forced to reset their expectations for the global interest rate outlook. News of the Fed’s “hawkish pause” overshadowed an unexpectedly dovish interest rate-policy environment in the rest of the world. In the eurozone, the European Central Bank lifted interest rates for the 10th consecutive time in September but hinted that rates had reached their peak amid signs that the economic outlook for the common currency bloc was dimming. The Bank of England surprised markets by holding interest rates steady during the month, though left the door open for further hikes.
The Lazard Global Listed Infrastructure Fund returned -6.34% (net of fees) during the quarter ending 30 September 2023, outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -7.64%, but underperforming the MSCI World Local Currency Index, which returned -2.63% for the same period.
Contributors to Performance
• Leading geostationary satellite owner and operator SES, performed strongly on the back of reporting a solid 1H2023 result, with both major verticals, Video and Connectivity, exceeding market expectations and EBITDA beating consensus estimates by 5%. There is US$3 billion of pre-tax compensation relating to C-band US spectrum assets proceeds that are set to be paid by the end of 2023; the equivalent of €5.40 per share or around 90% of the market capitalization as at 30 September 2023. In anticipation of this windfall gain, the company has launched a €150 million share buyback program. Its Middle Earth Orbit satellite constellation, O3b mPOWER, is set to be commercialised from the end of 2023, which should see an acceleration in revenue and earnings growth. Finally, the guidance for 2023 was reconfirmed. As at 30 September 2023 SES traded on less than 6x EBITDA.
• Despite US freight railroad Union Pacific reporting Q2 23 results below consensus expectations and lowering FY23 earnings guidance, the share price rose strongly on the appointment of Jim Vena as CEO, which became effective on 14 August 2023. Vena had been Union Pacific’s COO from 2019-21, having previously spent 40 years at Canadian National Railroad. He is widely regarded to be an excellent operator.
Detractors from Performance
• US freight railways Norfolk Southern and CSX both lost ground during the quarter in anticipation of a worsening macroeconomic environment. Norfolk Southern reported a weak 2Q23, with flow-on network effects (now resolved) from the Ohio derailment affecting performance, whereas CSX was in-line with market expectations. Industry cost estimates for the year became apparent, indicating amongst other things, a 21% increase in labour costs for 2023 over 2022. When combined with a weak macro environment affecting volumes, particularly in intermodal, EPS this year is unlikely to grow much and share prices are likely to be sluggish. Naturally, such conditions are fine by us, as longer-term fair values are unaffected, and share price volatility can provide excellent trading opportunities.
• UK diversified utility National Grid detracted from performance despite holding a robust investor day in July. The event focused on its electricity distribution network which confirmed our expectations that investment opportunities are ample in this business to accompany the electrification of domestic heating (heat pumps), transport (EVs), and the increased resilience required by a growing proportion of renewable power. National Grid also completed the sale of a further 20% in its UK Gas transmission business. We expect the company to dispose of its remaining 20% stake in the coming year. While already known, we believe the disposal price of GBP 0.7 billion is attractive. It appears that the market believes higher bond yields are negative for National Grid. However, with their allowed return moving with real bond yields and inflation being reflected through the tariffs and Asset Base valuation, we believe they are well protected against rising rates, highlighting the short-term focus of the market.
• Italian utility Snam fell as Italian bond yields increased and the market increased its perception of risk in the country, in light of the controversial tax on banks. However, we believe that the regulator is likely to grant Snam and other Italian regulated utility companies a significantly higher allowed return given the move in bond yields.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-04-5.pdfAugust, 2023
Global equity markets finished lower in August as investors continued to deal with global inflation and high interest rates. Core inflation, despite a meaningful decline, remained well above central bank targets. The ability of the central banks, notably the US Federal Reserve, to avoid a recession and engineer a soft landing remains a critical question heading into the fourth quarter of 2023.
The Lazard Global Listed Infrastructure Fund returned -4.68% (net of fees) during the month of August 2023, underperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -3.93%, and the MSCI World Local Currency Index, which returned -1.76% for the same period.
Contributors to Performance
• Leading geostationary satellite owner and operator SES, performed strongly on the back of reporting a solid 1H2023 result, with both major verticals Video and Connectivity exceeding market expectations and EBITDA beating consensus estimates by 5%. There is US$3 billion of pre-tax compensation relating to C-band US spectrum assets proceeds that are set to be paid by the end of 2023; the equivalent of €5.40 per share or around 80% of the market capitalization as at 31 August 2023. In anticipation of this windfall gain, the company has launched a €150 million share buyback program. Its Middle Earth Orbit satellite constellation, O3b mPOWER, is set to be commercialised from the end of 2023, which should see an acceleration in revenue and earnings growth. Finally, the guidance for 2023 was reconfirmed. As at 31 August 2023, SES traded on less than 6x EBITDA.
Detractors from Performance
• US freight railways Norfolk Southern and CSX both lost ground during the month in anticipation of a worsening macroeconomic environment. Norfolk Southern reported a weak 2Q23, with flow-on network effects (now resolved) from the Ohio derailment affecting performance, whereas CSX was in-line with market expectations. Additionally, CSX announced COO Jamie Boychuk is leaving the company, which has been taken as a concerning sign by the market as the job is difficult and the skillset scarce.
• Severn Trent shares suffered as the UK water sector remains in the spotlight over pollution incidents and service levels. In particular, Severn Trent along with other UK water companies, are facing a class action for allegedly under reporting pollution incidents. We note that Severn Trent was awarded the 4-star rating by the Environmental Agency for the fourth year in a row, but will continue to monitor the situation.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-04-4.pdfJuly, 2023
The global equity markets’ 2023 rally continued in July. With the start of a new corporate earnings season and inflationary pressures continuing to exert themselves, the focus during the month was squarely on the two levers that set stock prices— interest rates and company profits. In the US, the Federal Reserve, as expected, resumed its rate-hiking campaign in July. In Europe, where economic uncertainty has gripped the eurozone, the European Central Bank (ECB) lifted interest rates for a ninth consecutive time. While the ECB reported progress in its efforts to rein in price growth, it also acknowledged that inflation in the common currency bloc was expected to remain “too high for too long.”
The Lazard Global Listed Infrastructure Fund returned 1.37% (net of fees) during the month of July 2023, outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 0.92%, but underperforming the MSCI World Local Currency Index, which returned 2.92% for the same period.
Contributors to Performance
• Despite US freight railroad Union Pacific reporting Q2 23 results below consensus expectations and lowering FY23 earnings guidance the share price rose strongly on the appointment of Jim Vena as CEO, which will become effective on 14 August 2023. Vena had been Union Pacific’s COO from 2019-21, having previously spent 40 years at Canadian National Railroad. He is widely regarded to be an excellent operator.
• Infrastructure owner and operator Ferrovial performed well following the release of Q2 results for its key asset the 407ETR toll road in Ontario Canada, which indicated that traffic levels had significantly improved. Ferrovial also reported H1 2023 results ahead of consensus estimates. The success can be attributed to the Managed Lanes (MLs), with the recently opened I-66 which exceeded our forecast for the entire year’s EBITDA forecast. We believe this is due to higher tolls and stronger traffic.
• US freight railroad Norfolk Southern added to performance despite reporting Q2 23 results below consensus expectations. The company lowered its full year FY23 earnings guidance and updated investors on its recovery from the East Palestine derailment in February, but otherwise continued to demonstrate steadily improving service metrics.
• UK water utility United Utilities contributed to performance despite losing its coveted four-star UK Environmental Agency rating after being downgraded to three stars. We continue to assess the company’s environmental performance as strong, given it was only one of two companies in the UK not to have a serious pollution incident in 2022, and had top green status in all but one metric.
Detractors from Performance
• US freight railroad CSX fell after reporting results which were in-line with consensus expectations and maintaining its previously stated FY23 earnings guidance. CSX management noted falling coal yields, weakness in intermodal volumes, and higher labour cost inflation – these were also recurring themes at the other railroads’ results presentations. All three railroads remain focused on improving service levels and trying to attract volumes from the trucking market.
• UK diversified utility National Grid detracted from performance despite holding a robust investor day in July. The event focused on its electricity distribution network which confirmed our expectations that investment opportunities are ample in this business to accompany the electrification of domestic heating (heat pumps), transport (EVs), and the increased resilience required by a growing proportion of renewable power. National Grid also completed the sale of a further 20% in its UK Gas transmission business. We expect the company to dispose of its remaining 20% stake in the coming year. While already known, we believe the disposal price of GBP 0.7 billion is attractive.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-04-3.pdfJune, 2023
Global equity markets rallied in June, which pulled the second quarter into positive territory. While the overall news on global inflation showed slowing across the globe, the absolute level remained high, despite lower energy prices and slowing economic growth. US markets gained as corporate earnings declined for a second straight quarter but much less than initially feared. European markets rallied as inflation continued to recede and the job market remained strong, though affected somewhat by weak consumer spending.
The Lazard Global Listed Infrastructure Fund returned 2.09% (net of fees) during the quarter ending 30 June 2023, outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -0.68%, but underperforming the MSCI World Local Currency Index, which returned 7.15% for the same period.
Contributors to Performance
• US freight railroads CSX and Norfolk Southern added to performance despite no reported results over the period. For the group, freight volumes remain slightly below levels from last year and success in improving operating metrics remains mixed. Given the railroads’ large additions to staffing and wage increases over the past year, we do not expect significant improvements in profitability from this point. The railroads remain focused on improving their service levels and winning volumes from the trucking market.
• Global infrastructure owner and operator Ferrovial rose during the quarter after releasing their Q1 2023 earnings with headline group EBITDA broadly in line with expectation. The key takeaway was that the US Managed Lanes (MLs) now account for around 70% of consolidated EBITDA. Ferrovial’s MLs have grown from less than €200mn EBITDA in 2018 to an annualized run-rate of close to €800m today. Coupled with continuing recovery in the traffic of Ferrovial’s key asset the 407 in Ontario Canada and our expectations of a return to its pre-pandemic EBITDA growth rates by the year’s end, we believe this strong performance may continue in the medium term, given the valuation upside.
• Italian utility Terna performed well as the regulator confirmed that the allowed return was set to increase due to rising interest rates. The regulatory framework is evolving towards a UK-style total expenditure (Totex) incentive that should enable the company to continue to benefit from increased efficiencies both on operating and capital expenditures.
Detractors from Performance
• Severn Trent, Pennon, National Grid and United Utilities detracted from performance as the market continued its aggressive rally. The uncertainty surrounding the future of the UK’s largest water company, Thames Water, created some tension for the regulated sector at a time when household incomes remain squeezed. We believe that our listed regulated utilities in the UK are very different from Thames Water. Firstly, their levels of debt are significantly lower; secondly they do not use tax efficient vehicles in tax haven countries; and finally their operating performance, albeit not perfect, remains towards the top of the industry. As such, we believe that the continued strong regulatory framework in the UK should enable strongly performing operators to create value out of the significant investment programmes they need to upgrade their networks to transition towards Net Zero.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-04-2.pdfMay, 2023
The global equity markets gave back some of their recent gains in May. Speculation over a potential pause in central bank tightening continues to dominate investor thinking. European economies began to show signs of disinflation, with sharp declines in annual inflation rates in Germany, France, and Spain. The United States continues to show strength, reporting a surprising increase in job vacancies, causing inflationary pressures to persist. Last-minute passage of a debt-ceiling relief package necessary to avoid a government default looked likely. US utilities dropped 6% (as measured by the S&P 500 Utilities Index in USD) and underperformed both the S&P 500 and MSCI World indices by a substantial margin. Most of the weakness occurred in the second half of the month alongside a renewed spike in short-term rates.
The Lazard Global Listed Infrastructure Fund returned -1.94% (net of fees) during the month of May 2023, outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -5.10%, but underperforming the MSCI World Local Currency Index, which returned -0.22% for the same period.
Contributors to Performance
• Global infrastructure owner and operator Ferrovial released their Q1 2023 earnings in mid-May with headline group EBITDA broadly in line with expectation. The key takeaway was that the US Managed Lanes (MLs) now account for around 70% of consolidated EBITDA. Ferrovial’s MLs have grown from less than €200mn EBITDA in 2018 to an annualised run-rate of close to €800m today. Coupled with continuing recovery in the traffic of Ferrovial’s key asset the 407 in Ontario Canada and our expectations of a return to its pre-pandemic EBITDA growth rates by the year’s end, we believe this strong performance can continue in the medium term given the valuation upside.
• Italian utility Hera benefitted from the continued perception that risks are receding in its gas business, and that the new management team will provide continuity in the disciplined management of the business.
Detractors from Performance
• French concessions and construction company Vinci gave back some of the strong performance since the start of the year as motorway traffic levels in April were only 1% above 2019, slightly tapering the recovery momentum. We believe that the market is overly focused on short-term traffic data.
• UK utilities United Utilities, Severn Trent and Pennon fell as the market rotated towards the technology sector. The largest financial backer of the Labour party, the union Unite, called for nationalisation of the water sector. Coincidentally, the industry body Water UK, released an apology for the poor level of pollution management of the industry and endeavoured to step up investment in the short and medium-term. Susan Davy, CEO of Pennon, decided to forego her variable compensation for 2022/23 in light of the disappointing environmental performance. We believe that the recent improvements, including a 50% reduction in pollution incidents and a 30% reduction in combined sewer overflows, suggests that the long-term investment plan of the company is starting to bear fruit.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-04-1.pdfApril, 2023
Global equity markets recorded a modest gain in April, as investors adopted a cautious posture amid growing uncertainty about the global economic outlook. In the US, economic news continued to be mixed as corporate earnings remained above lowered expectations halfway through the reporting season. Economic growth eased but inflation, particularly wage pressures, remained stubbornly high as US unemployment claims declined in April. Meanwhile, high inflation led to stagnant consumer spending in the eurozone economy. The European Central Bank matched the rate increases of the US Federal Reserve and investors expect it will raise rates for the seventh consecutive time in May.
The Lazard Global Listed Infrastructure Fund returned 2.64% (net of fees) during the month of April 2023, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 1.95%, and the MSCI World Local Currency Index, which returned 1.60% for the same period.
Contributors to Performance
• French concession and construction company Vinci performed strongly after reporting first quarter revenues that were well above expectations across all divisions, especially in energy services and Cobra Industrial services (IS). Vinci Energies reported 16% organic growth, and Cobra IS reported 20%. Airport traffic recovered to only 12% short of Q1 2019, after increasing 54% YoY. We believe this should underpin another year of strong cash flows for the group.
Detractors from Performance
• US railroad Norfolk Southern was a detractor to performance in light of the continuing aftermath of the East Palestine, Ohio, derailment in February. 1Q23 results included a US$387m provision for costs associated with the derailment (not including possible claims against insurance policies), flat volumes, increased prices, and a similar operating ratio to last year. The network is operating poorly at the moment, with dwell times high and train speeds low. Despite these immediate issues, the company is being very clear about the need for a long-term service quality driven growth strategy, without the overly lean staffing of previous years.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-04.pdfMarch, 2023
In a quarter marred by bank failures and a state-backed bank merger, optimism still won out. Fueling the optimism, many investors believed that central banks would pivot from their hard line, anti-inflation stance. Easing inflationary pressures, especially in Europe, and the sudden fragility in the banking sector after the second largest US bank failure (Silicon Valley Bank) and the merger of Credit Suisse and UBS supported the expectations of a central bank pivot.
The Lazard Global Listed Infrastructure Fund returned 4.07% (net of fees) during the quarter ending 31 March 2023, outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 0.01%, but underperforming the MSCI World Local Currency Index, which returned 7.44% for the same period.
Contributors to Performance
• French concession and construction company Vinci performed strongly over the quarter as the company’s planned tariff increase in its French motorway business was implemented and the company also defied its own conservative guidance on free cash flow for 2022 to deliver record levels of cash generation. While motorway assets continue to perform well and airports rebounded stronger than expected, the services businesses, especially in energy, showed their ability to maintain high levels of margins and a strong ability to weather inflationary pressures. A move over the last 10-years to higher value-add, higher engineering content services is proving instrumental to this achievement.
Detractors from Performance
• Norfolk Southern (NSC) fell on the back of the East Palestine, Ohio derailment on 3 February 2023. As a result of the derailment, on 6 February 2023, Norfolk Southern in conjunction with the Environmental Protection Agency (EPA), conducted a controlled vent and burn of hazardous vinyl chloride, which resulted in the images reported in the press. There were no direct fatalities or damage to third party property, and NSC is taking responsibility for the clean-up. The National Transportation Safety Board’s (NTSB) preliminary findings were that an overheated bearing triggered the crew to stop the train which was what caused the derailment; all in accordance with existing safety protocols. A final NTSB report will take 12-18 months. At this stage, we believe the likely financial impacts are small relative to overall valuation and include around US$100m self-insurance for third party damages and their own property, and some disruption to the network which was cleared relatively quickly. Longer term, there is the possibility of greater capex and/or opex to reduce the prevalence of future accidents (there have been around 1000 derailments in the US since 2019), although any extra costs in our view, would likely be passed through to shippers.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-03.pdfFebruary, 2023
Global equity markets retreated in February, as investors were forced to re-set their expectations for the current global rate-hiking cycle. The optimism that fueled last month’s market rally evaporated and was replaced by concerns that persistent inflationary pressures and a resilient global economy would force central banks to press on with their monetary tightening campaigns. The European Central Bank lifted interest rates by 50 bps and vowed that there would be no let-up in its aggressive efforts to wring high inflation out of the eurozone. The Bank of England also increased interest rates 50 bps as inflation in the UK slowed for a third consecutive month in January, though it remained in double digits. Investors cheered the US Federal Reserve’s announcement that it was raising its benchmark interest rate 25 bps, its smallest increase since March 2022, and that it was seeing improvements in inflation.
The Lazard Global Listed Infrastructure Fund returned -1.51% (net of fees) during the month of February 2023, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -4.22%, and the MSCI World Local Currency Index, which returned -1.57% for the same period.
Contributors to Performance
• Vinci shares continued to perform well as the company defied its own conservative guidance on free cash flow for 2022 to deliver record levels of cash generation. While motorway assets continue to perform well and airports rebounded stronger than expected, the services businesses, especially in energy, showed their ability to maintain high levels of margins and a strong ability to weather inflationary pressures. A move over the last 10-years to higher value-add, higher engineering content services is proving instrumental to this achievement.
• National Grid shares were strong on continued high inflation in the UK that is helping the pace at which its UK regulated businesses compound regulated asset growth.
Detractors from Performance
• Norfolk Southern (NSC) fell on the back of the East Palestine, Ohio derailment on 3 February 2023. As a result of the derailment, on 6 February 2023, Norfolk Southern in conjunction with the Environmental Protection Agency (EPA), conducted a controlled vent and burn of hazardous vinyl chloride, which resulted in the dramatic images seen in the press. There were no direct fatalities or damage to third party property, and NSC is taking responsibility for the clean-up. The National Transportation Safety Board’s (NTSB) preliminary findings were that an overheated bearing triggered the crew to stop the train which was what caused the derailment; all in accordance with existing safety protocols. A final NTSB report will take 12-18 months. At this stage, the likely financial impacts are small relative to overall valuation and include around US$100m selfinsurance for third party damages and their own property, and some disruption to the network which was cleared relatively quickly. Longer term there is the possibility of greater capex and/or opex to reduce the prevalence of future accidents (there have been around 1000 derailments in the US since 2019), although any extra costs in our view, would likely be passed through to shippers.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-02.pdfJanuary, 2023
Global equity markets began 2023 with a sharp rally. We believe there have been positive signs of moderating inflation along with better-than-expected corporate earnings and GDP numbers alleviated investor concerns over a deep and prolonged recession.
European markets outperformed as the milder winter alleviated energy shortage concerns and inflation numbers showed real signs of abatement.
The Lazard Global Listed Infrastructure Fund returned 4.53% (net of fees) during the month of January 2023, outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 2.70%, but underperforming the MSCI World Local Currency Index, which returned 6.50% for the same period.
Contributors to Performance
• French concession and construction company Vinci performed strongly as the company’s planned tariff increase in its French motorway business is due to be implemented in early February, consistent with the concession contract and currently without challenge from politicians. The 2022 traffic levels also confirmed that airport traffic continued its recovery, reaching 72% of 2019 levels.
• Global infrastructure owner and developer Ferrovial rose despite limited company news. We believe Ferrovial does have some positive catalysts which are seemingly impacting market sentiment. Its key asset the H407-ETR motorway will likely see traffic levels rebound to pre-COVID-19 pandemic volumes as the relaxation of lockdowns see continued traffic growth on its Ontario motorway, regardless of potential weakness in the general economy. The increasingly important US managed lane assets will continue to test toll elasticity levels and indications are base tolls will increase at 8% as per last year, with surge pricing increasing even higher. Broadly, long term interest rates appear to be stabilising, which we believe is good news for the sentiment of a stock which has long-dated concessions; though this has no impact on our value as we use long-term throughthe-cycle interest rate assumptions. In spite of a strong share price, Ferrovial still trades at a sizable discount to our intrinsic value.
Detractors from Performance
• US utility company Exelon fell following the company’s filing for a multi-year settlement in Illinois for its ComEd utility. The company requested a profiling of revenue collection more back-end loaded than the market had expected. This is likely to put pressure on the early year profitability growth. However, we believe that this timing difference has minimal valuation impact as we are more focused on the company’s ability to deploy capital at return levels that will create value.
• North American freight railroad Canadian National Railway (CNR) detracted slightly from performance after reporting its Q4 22 result. While its profit result was marginally ahead of consensus, the company’s 2023 EPS guidance was likely to have been below consensus expectations, with the company guiding it to grow in the ‘low single-digit range’. As expected, the railroad guided freight pricing at levels above rail inflation. Our assumptions for the company incorporate a recession, and for labour cost inflation to offset the company’s productivity gains. We believe that CNR offers value upside and inflation protection arising from pricing power.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2023-01.pdfDecember, 2022
Global stocks finished December lower as the broad themes of 2022—inflation, rising interest rates, war in Ukraine, and slowing corporate profits—continued to dominate investor fears during the quarter. Inflation showed signs of abating but remained well above central bank targets causing the US Federal Reserve to maintain its hawkish tone. European inflation appears to have peaked in October but remains well above the European Central Bank’s targets. While the eurozone remains in a recession, optimism that the recession will not be as deep as initially feared surfaced in December.
The Lazard Global Listed Infrastructure Fund returned 11.01% (net of fees) during the quarter ending 31 December 2022, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 5.89%, and the MSCI World Local Currency Index, which returned 7.45% for the same period.
Contributors to Performance
• US freight railroads Norfolk Southern and CSX added to performance after reporting 3Q22 results that were better than market expectations. During Q3, both railroads reported relatively flat traffic volumes, but improved operating metrics including faster speeds and lower dwell time. The Surface Transportation Board published a report showing rising headcounts, which demonstrated that the railroads have continued to steadily eliminate their employee deficits, despite the tight labour market. The wage agreement for the majority of both railroads’ employees was resolved in December. Also in December, Norfolk Southern held its first Analyst Day since 2019, providing high-level financial guidance (mid-single-digit revenue growth, highsingle-digit operating income growth, and low-double-digit EPS growth). Norfolk Southern outlined a new operating plan and emphasised that improved service is the key to unlocking future volume growth, which means maintaining higher resource levels (notably labour) throughout the cycle, and de-emphasising cost cutting. While it will increase the cyclicality of the railroad’s profit stream, it should, we believe, also increase opportunities to capture longer term volume growth.
Detractors from Performance
• Geostationary orbit satellite operator Eutelsat fell during the quarter following its management presentations regarding the proposed merger with low Earth orbit (LEO) satellite operator OneWeb in November. While we believe that a combined company should be able to successfully launch a commercial LEO constellation and see some success in the fast-growing connectivity segment, we are more cautious about the deal’s financials. In particular, how it impacts existing Eutelsat shareholders who are effectively giving up more than €400m in annual FCF and a well-covered dividend for a company with a more uncertain, but potentially much faster growing revenue trajectory. Notwithstanding the negative aspects of this merger, in our view the current share price does not reflect even a bearish view of the future cashflows from the combined entity.
November, 2022
Global equity markets rose for a second straight month as inflation showed signs of easing globally, increasing the potential for a slowing in the Federal Reserve’s (Fed) interest rate hikes. European markets led developed markets as inflation unexpectedly decelerated and employment figures showed strong gains, fuelling speculation that the European Central Bank may begin moderating its rate hiking campaign in December 2022. The outlook was not as positive in the UK, where the Bank of England raised interest rates 75 bps during the month, its largest hike in 33 years, as domestic inflation reached a 41-year high. While US equity markets moved higher, the US yield curve continued to invert, raising fears of a recession. The potential for less hawkish Fed policy caused the US dollar to fall sharply against most major currencies including the euro, UK pound, and yen.
The Lazard Global Listed Infrastructure Fund returned 7.58% (net of fees) during the month of November 2022, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 6.15%, and the MSCI World Local Currency Index, which returned 5.65% for the same period.
Contributors to Performance
• US freight railroads Norfolk Southern and CSX added to performance. Over November, both railroads reported relatively flat traffic volumes but improved operating metrics, including faster speeds and lower dwell time. The Surface Transportation Board published a report showing higher headcounts, which demonstrates that the railroads are continuing to steadily eliminate their employee deficits, despite the tight labour market. The tentative wage agreements were not voted for by all twelve unions and will take a little longer to resolve. Norfolk Southern also announced the acquisition of Cincinnati Southern Railway, a 337 mile railroad that runs from Cincinnati, Ohio to Chattanooga, Tennessee.
Detractors from Performance
• Geostationary orbit satellite operator Eutelsat fell in November following its management presentations regarding the proposed merger with low Earth orbit (LEO) satellite operator OneWeb. While we believe that a combined company should be able to successfully launch a commercial LEO constellation and see some success in the fast-growing connectivity segment, we are more cautious around the deal’s financials. In particular, how it impacts existing Eutelsat shareholders who are effectively giving up more than €400m in annual FCF and a well-covered dividend for a company with a more uncertain, but potentially much faster growing revenue trajectory. Notwithstanding the negative aspects of this merger, in our view the current share price does not reflect even a bearish view of the future cashflows from the combined entity. Eutelsat’s satellite brethren, SES, also drifted lower in November, no doubt in sympathy to Eutelsat’s share price woes but possibly also reflecting a pause after a very strong October when SES reported better than expected Q3 2022 results.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardEmergingMarketsEquityFund_FactSheet_2022-11-1.pdfOctober, 2022
Global equity markets rallied in October as investors saw glimmers of hope despite a challenging macroeconomic environment. The US and European markets were the strongest regions for the month. In the US, overall inflation remained high, but investors found solace in data indicating that private-sector wage growth had slowed materially in the third quarter, which suggested that the risk of unrelenting wage increases putting upward pressure on prices was abating. Investor optimism for a pivot in the US Federal Reserve’s (the Fed) pace of interest rate hikes helped to propel the rally despite little economic evidence to support an easing. European markets benefitted from the increase in oil prices; the Italian election of Giorgia Meloni, who vowed fiscal prudence; and a hawkish European Central Bank that hiked rates, matching inflation-fighting moves from the Fed.
The Lazard Global Listed Infrastructure Fund returned 7.32% (net of fees) during the month of October 2022, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 3.50%, and the MSCI World Local Currency Index, which returned 7.14% for the same period.
Contributors to Performance
French toll road company, Vinci recovered in October, as the market realised that the company’s inflation-indexed motorway contracts were appealing in the current environment.
Norfolk Southern and CSX, North American railroad companies, reported 3Q22 results that were better than expected.
Volumes continue to show lacklustre movement, but pricing is strong and operating metrics have improved. In particular, the companies have hired new conductors and the ongoing wage issues appear to be resolved. Norfolk Southern is holding an investor day in early December, which should see further commitment to improving operating ratios.
Despite falling earlier in the month, Spanish listed Infrastructure owner and operator Ferrovial, rose strongly in the final week of October after reporting better than expected September quarterly results, to end up one of the best performers during October. Ferrovial reported 9-month 2022 proportional EBITDA of €1,130m, +92% YoY, +17% versus 9-month 2019, preCOVID-19, and was 13% above consensus estimates. We consider the results to be excellent overall, primarily due to the four US Managed Lanes (30% of our value) beating even the most ambitious broker forecasts again, with combined EBITDA +48% YoY given double digit toll rises YoY in Q3. There was also strong traffic and FCF recovery at the 407-ETR (55% of our value) which grew +20% YoY as Toronto, Canada, continues to re-open following its COVID-19 lockdowns, and is now only -8% against 2019 pre-COVID-19 traffic levels.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2022-10.pdfSeptember, 2022
This year’s decline in the global equity markets accelerated in the September 2022 quarter, with the markets falling more than 8.3% to finish with a quarterly loss of 4.4% (in local currency terms). Sentiment turned increasingly pessimistic in September as central bankers, with certain exceptions, reaffirmed that their commitment to fighting inflation was their highest priority irrespective of the implications for capital markets. Inflation remained stubbornly entrenched, with every new reading typically well above consensus expectations. Rising US interest rates added more strength to the US dollar, with both the euro and the yen falling to lows not seen in more than 20 years. A proposed tax cut by the new Truss administration in the United Kingdom sent the pound tumbling, which required an intervention by the Bank of England to reassure investors.
The Lazard Global Listed Infrastructure Fund returned -10.44% (net of fees) during the quarter ending 30 September 2022, underperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -8.47%, and the MSCI World Local Currency Index, which returned –4.42% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2022-09.pdfAugust, 2022
Volatility in global equities continued in August as hopes that inflation had crested and central banks would modify their hawkish stance were all but dashed. Escalating inflation in Europe and tight labour conditions in the United States began to erode optimism over any slowdown in tightening. US Federal Reserve Chair Jerome Powell’s statement that the Fed “must keep at it until the job is done” erased any ambiguity over a softening in the Fed’s position. This clear priority for fighting inflation over supporting global economic growth triggered a sharp sell-off in the last days of the month. This theme was reinforced by the European Central Bank as officials reaffirmed their anti-inflation priority. The Lazard Global Listed Infrastructure Fund returned -2.45% (net of fees) during the month of August 2022, underperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -2.30%, and outperforming the MSCI World Local Currency Index, which returned -3.46% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2022-08.pdfJuly, 2022
Optimism that inflation had crested and recessionary pressures would cause central banks to retreat from planned rate hikes sustained the markets in July 2022. This held, even in the face of another 75-basis-point increase by the US Federal Reserve and hawkish rhetoric from other major central banks. With about half of corporations reporting, earnings surprised to the upside; a majority exceeded estimates, although at a lower percentage than in the past few quarters. Recessionary fears weighed on oil prices, which retreated close to pre-Ukraine invasion levels.
The Lazard Global Listed Infrastructure Fund returned 3.94% (net of fees) during the month of July 2022, underperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 5.76%, and the MSCI World Local Currency Index, which returned 7.98% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2022-07.pdfMay, 2022
Volatility remained elevated in global equity markets in May 2022. Central bank policies continued to dominate investor sentiment as the banks attempted to control inflationary pressures through tighter monetary policies. The US Federal Reserve has remained a focal point as the US economy has been healthy and appears capable of withstanding higher interest rates without falling into a recession while ongoing supply chain issues continued to hinder global growth. The war in Ukraine continued to drag on, with neither side showing any meaningful progress. Russia was increasingly ostracised as Finland and Sweden both submitted applications to join NATO, and several countries, including the United Kingdom, looked for ways to cease buying Russian oil and gas.
The Lazard Global Listed Infrastructure Fund returned -0.56% (net of fees) during the month of May 2022, underperforming both the MSCI World Core Infrastructure 100% Hedged to A UD Index, which returned 1.64%, and the MSCI World Local Currency Index, which returned -0.23% for the same period
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2022-05.pdfMarch, 2022
The global equity markets rebounded in March 2022 but nevertheless finished their worst quarter since the onset of the COVID-19 pandemic. The conflict in Eastern Europe moved into its second month with no sign of resolution. Russia faced nearly worldwide condemnation, its stocks were removed from the major indices, and the country enacted capital controls to rescue the ruble. Inflation continued to be a major worry as it escalated globally. The Federal Reserve raised its discount rate by 25 basis points in March 2022 and assumed a hawkish stance, telegraphing six more hikes for 2022. Europe also experienced the highest inflation in more than 40 years as higher energy prices and natural gas rationing took hold. The European Central Bank is also expected to raise rates this year.
The Lazard Global Listed Infrastructure Fund returned 2.15% (net of fees) during the quarter ending 31 March 2022, underperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 2.70%, but outperforming the MSCI World Local Currency Index, which returned -4.58% for the same period
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2022-03.pdfFebruary, 2022
The sell-off in the global equity markets continued in February 2022, driven in large part by Russia’s invasion of Ukraine. The Russian invasion beginning on 24 February 2022 and the increasingly aggressive actions and rhetoric from President Vladimir Putin, including placing Russian deterrent nuclear forces on high alert, drew a loud chorus of condemnation and reprisals from around the world. The markets had become increasingly apprehensive over the possibility of an invasion, and the actual outbreak did send volatility measures higher, but they remain well below levels seen during the COVID-19 outbreak and Global Financial Crisis. The Lazard Global Listed Infrastructure Fund returned 0.21% (net of fees) during the month of February 2022, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -0.63%, and the MSCI World Local Currency Index, which returned -2.65% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2022-02.pdfDecember, 2021
In a volatile period, global equity markets advanced in the fourth quarter ended 31 December 2021, with risk appetites waxing and waning as investors digested the implications of several developments. Although ‘Omicron’, the COVID-19 variant that surfaced in November 2021, proved to be more infectious than the ‘Delta’ strain, investors took consolation that it also appeared to be far less virulent. A further signal of the improving U.S. economy came from the Federal Reserve, which announced that it would reduce its bond purchases sooner than expected in 2022 and forecast three interest rate increases in 2022. Both the Bank of England and European Central Bank followed with similar monetary tightening moves. These all helped to alleviate concerns over inflation and an overheating of the global economy.
The Lazard Global Listed Infrastructure Fund returned 9.67% (net of fees) during the quarter ended 31 December 2021, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 8.80%, and the MSCI World Local Currency Index, which returned 8.11% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-12.pdfNovember, 2021
The global equity markets retreated in November 2021 as the emergence of a new coronavirus variant, Omicron, and hawkish comments from U.S. Federal Reserve Chair Jerome Powell offset a very strong corporate earnings season. Volatility surged with the uncertainty over the severity and transmissibility of the mutated virus and the efficacy of current vaccines. Inflationary pressures continued, as did labour shortages, supply chain disruptions, and commodity price increases, sending interest rates higher.
The Lazard Global Listed Infrastructure Fund returned -0.82% (net of fees) during the month of November 2021, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -2.77%, and the MSCI World Local Currency Index, which returned -1.47% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-11.pdfOctober, 2021
Following September 2021’s sell-off, the global equity markets were again in positive territory in October 2021. A very strong start to corporate earnings season provided the fuel for the rally. Despite inflationary pressures, companies have been able to maintain their operating margins as demand has remained high. Nevertheless, inflationary pressures remain, and the supply chain disruptions continue to hamper the global recovery. The Lazard Global Listed Infrastructure Fund returned 3.64% (net of fees) during the month, underperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 4.70%, and the MSCI World Local Currency Index, which returned 5.50% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-10_en.pdfSeptember, 2021
A broad-based decline in September 2021 left the global equity markets relatively flat for the quarter to 30 September 2021. The U.S. Federal Reserve’s stimulus policy path was a focal point as they announced preparations to slow the monthly purchase of government-backed bonds, but also to raise interest rates in 2022. In Europe, the European Central Bank and the Bank of England also signalled they were prepared to retreat from their accommodative monetary policy stances. Broad-based supply chain disruptions continue to hamper the global recovery, creating inflationary pressures on everything from agricultural produce to electronics to medical supplies. The Lazard Global Listed Infrastructure Fund returned 0.90% (net of fees) during the quarter, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -0.23%, and the MSCI World Local Currency Index, which returned 0.58% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-09_en.pdfAugust, 2021
The global equity markets continued their historic recovery with a seventh straight monthly gain in August 2021. Momentum was strong as many indices posted multiple all-time highs during the month. The United States, overcoming a decline in consumer confidence, continued to lead the major equity markets. The euro area reported surprisingly strong GDP growth for the second quarter, outpacing most major economies, including those of China and the United States. Corporate earnings in Europe recovered further as vaccinations increased and the economy continued to reopen.
The Lazard Global Listed Infrastructure Fund returned 0.43% (net of fees) during the month of August 2021, underperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 1.72%, and the MSCI World Local Currency Index, which returned 2.67% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-08_en.pdfJuly, 2021
The global equity markets notched their sixth consecutive monthly gain in July 2021, boosted by strong corporate earnings and record low interest rates. COVID-19 vaccination rates continued to improve in developed markets despite the spread of the new Delta variant, which slowed re-openings in some countries. Central banks maintained their accommodative policies to foster economic growth, and interest rates declined to levels only slightly above the pandemic lows of a year ago.
The Lazard Global Listed Infrastructure Fund returned 3.19% (net of fees) during the month of July 2021, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 1.90%, and the MSCI World Local Currency Index, which returned 1.71% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-07_en.pdfJune, 2021
World equity markets rose sharply in Q2 2021 on investor confidence that the global economic recovery would continue uninterrupted despite the emergence of inflation risk. While COVID-19 risk remained a concern as intensifying outbreaks emerged in many parts of the world, the spectre of inflation was front and centre in the minds of investors during the period amid supply-chain bottlenecks, a surge in commodity prices, and sharp increases in China’s factory-gate prices in April and May 2021. Investors were increasingly worried that pandemic-driven stimulus measures would result in a significant rise in global inflation, which, in turn, could force key central banks to retreat from their ultra-accommodative monetary policy stances before an economic recovery is fully realized. The current low interest rate environment has also propped up stock markets by driving investors chasing higher returns toward risk assets.
The Lazard Global Listed Infrastructure Fund returned 4.93% (net of fees) during the quarter outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 3.60% but underperforming the MSCI World Local Currency Index, which returned 7.58% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-06_en.pdfMay, 2021
Global equity markets posted a positive return f or the f ourth straight month in May 2021. Progress on vaccinations, particularly in Europe, has been reopening the global economy, w hich, in turn, has boosted the shares of economically sensitive cyclical companies . Inf lation f ears surf aced in the month, w ith labour shortages beginning to appear in many service industries and commodity prices showing hefty year-over-year increases.
The Lazard Global Listed Infrastructure Fund returned 1.64% (net of f ees) during the month, outperforming both the MS CI World Core Infrastructure 100% Hedged to A UD Index, w hich returned 0.28%, and the MSCI World Local Currency Index, w hich returned 1.03% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-05_en.pdfApril, 2021
Global equity markets continued their year-long rally into A pril 2021, rising over 4% in the month. Surging corporate prof its, meaningf ul vaccine progress, and a continuation of the accommodative policies from the US Federal Reserve and European Central Bank provided ample support to sustain the rally . The United States led the major markets in the month, driven in part by a signif icant increase in company reported earnings in the quarter, w hich w as w ell ahead of expectations . European markets w ere also comparatively strong as industrial f igures show ed a strong pick-up in new orders, overcoming another recession (as the euro zone reported tw o consecutive quarters of negative GDP grow th).
The Lazard Global Listed Infrastructure Fund returned 3.0% (net of f ees) during the month, underperf orming both the MSCI World Core Inf rastructure 100% Hedged to A UD Index, w hich returned 3.08%, and the MSCI World Local Currency Index, w hich returned 4.04% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-04_en.pdfMarch, 2021
The global equity markets posted another gain in March 2021 rallying 4.8% to close the f irst quarter w ith a gain of 5.8% (in local currency terms). The accelerating global rollout of the COV ID-19 vaccines and passage of USD$1.9 trillion stimulus bill in the United States provided hope that the global recovery w ould pick-up speed despite w eaker-than-expected employment grow th. The vaccination process, w hile gaining in eff iciency, continues to be uneven w ith signif icant inoculation diff erences across markets causing country lockdow ns and surges in certain areas .
The Lazard Global Listed Inf rastructure Fund returned 3.61% (net of fees) during the quarter underperforming both the MSCI World Core Inf rastructure 100% Hedged to A UD Index, w hich returned 5.73% and the MSCI World Local Currency Index, w hich returned 5.82% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-03.pdfFebruary, 2021
Global equity markets continued their rally in February 2021 w ith many indices reaching all-time highs in the month. Global equities are now trading more than 60% (in local currency terms) above their March 2020 low . The global rollout of more than half a dozen COV ID-19 vaccines has appeared to stem the virus surge despite the ongoing emergence of new er variants . This coupled w ith a commitment of most of the central banks to ongoing stimulative measures continues to provide support to global equity markets . Interest rates pushed higher at the end of the month as investors began to w orry about inflationary pressures.
The Lazard Global Listed Inf rastructure Fund returned 0.84% (net of f ees) during the month, outperf orming the MS CI World Core Inf rastructure 100% Hedged to A UD Index, w hich returned -0.94%, but underperf orming the MSCI World Local Currency Index, w hich returned 1.73% f or the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-02_en.pdfJanuary, 2021
Global equity markets began January 2021 with the same momentum that characterised the final months of 2020, only to see it dissipate in the final w eek pushing the broad developed market indices to a small loss (in local currency terms) f or the month. COVID-19 new s continued to dominate investor behaviour as a slow rollout of the new vaccines coupled with the emergence of several new , more infectious strains added to anxiety and locked down the United Kingdom. The United States saw a transition in Presidency, but only after a riot, and a second impeachment of former President Trump highlighted the sharp divide in the country .
Disappointingly the Lazard Global Listed Infrastructure Fund returned -3.71% (net of fees) during the month, underperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned -0.99% and the MSCI World Local Currency Index, which returned -0.31% f or the same period
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2021-01_en.pdfDecember, 2020
Global equity markets finished 2020 with a 12.36% gain (in local terms) in the quarter, capping a volatile year where global markets fell more than 30% from 1 January 2020 to the late-March 2020 lows but finished the year up over 13%. The introduction of two more vaccines to inoculate against COVID-19 provided increasing hope that the end of the global pandemic was in sight, despite the challenges in administration and a sharp increase in worldwide cases. The United Kingdom and European Union arrived at a last minute Brexit agreement, sending the pound higher. The Lazard Global Listed Infrastructure Fund returned 5.45% (net of fees) during the quarter outperforming the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 4.16% but underperforming the MSCI World Local Currency Index, which returned 12.36% for the same period.
Contributors to Performance
• US freight rail network CSX performed strongly over the past quarter. In October 2020, CSX published its Q3 result which showed revenue 11% lower than in Q3 2019 as a result of the pandemic. Significantly, the company managed its labour expense 10% lower, and benefited from lower fuel prices and cost management initiatives, resulting in an unchanged operating profit margin. Strong cash generation resulted in the announcement of a new US$5bn share buyback. In Q4, traffic levels recovered ending 3.8% higher compared to Q3 2019. Data from the railroad regulator shows that CSX continues to generate productivity gains (carloads/employee). In early December 2020, CSX acquired New England’s Pan Am Railways, the US’s largest regional railroad, however sufficient data has not been released with which to evaluate the acquisition.
• Vinci added to performance during the period as the business exposure to airports benefitted from the news of progress towards a vaccine against COVID-19. The group has exposure through Portuguese airports ANA, Gatwick Airport, and to a lesser extent, an 8% stake in Paris Airports, ADP. Broadly speaking our airport forecasts have passenger volumes in CY23 some 20% below the pre-pandemic historical levels of CY19. However importantly, ANA and Gatwick have greater exposure to tourism, which we believe are likely to benefit faster than business travel. The company is still in talks with the French government for significant investment to renovate France’s B roads network, which could be compensated through concession extensions, rather than tolling those B roads.
• The airport relief rally also helped Atlantia, owner of the Rome airports and the Nice airport. Atlantia continues its discussion with the government on the resolution to the conflict that arose following the Genoa bridge collapse. While some progress is clear as far as the new financial plan is concerned, including large investments in the motorway network, the discussion with the consortium led by state-owned bank CDP are not progressing. As a result, Altantia has re-opened the disposal process to third party investors in order to ensure that any sale delivers fair value for its investors, and not a discounted value as currently implied by the level of the CDP offer mentioned in the press. We welcome this decision by Atlantia to preserve value of the ASPI road concession for shareholders.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2020-12_en.pdfNovember, 2020
Global equity markets had a stellar month, returning 11.97% (in local currency terms) in November 2020. The announcement of highly successful vaccine tests from both Pfizer and Moderna on succeeding Mondays brought hope that the end of the global pandemic was finally within reach. The announcements bore a marked contrast to the sharp increase in global COVID-19 cases.
The US election was also largely decided, settling a significant amount of political uncertainty. The global equity markets were also helped by a weaker US dollar. Country leadership also reversed as Italy, Spain, and Austria performed well during the month, but remain laggards for the year. The Lazard Global Listed Infrastructure Fund returned 9.5% (net of fees) during the month, outperforming both the MSCI World Core Infrastructure 100% Hedged to AUD Index, which returned 7% and the MSCI World Local Currency Index, which returned 6.7% for the same period.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LazardGlobalListedInfrastructureFund_FactSheet_2020-11_en.pdfOctober, 2020
Global e quit y markets re trea te d in Oct ober 20 20 as volati lit y esca late d wit h i ncreased anxie t y over US e lec ti ons and a resurge nce of COVID -19 . The fea red sec ond wa ve of t he COVID -19 virus has was hed over Europe and the Unit ed States , wi th i nfec ti on rat es approac hi ng and e xce edi ng pre vi ous hi gh le vels in ma ny areas . European marke ts bore the brunt of the de cli ne as t he imposit ion of new res trict ions wei ghed on the ir ec onomic outl ook whic h was al ready la gging t he rest of the worl d’s rec ove ry s i nc e Ma rc h 2 0 20.
The La zard Global Lis te d Infrast ruct ure Fund re turne d -2 .4% (net of fees ) duri ng the mont h, unde rpe rformi ng both the MSCI Worl d Core Infras truct ure 10 0% He dged to AUD Inde x, which re turned -2.2 % and the MSCI World Local Curre nc y Index, whi ch re t urned -1 .95% for t he s ame pe riod.
ticker: LAZ0014AU
commentary_block: Array
factsheet_url:
Factsheet
release_schedule: Monthly
fund_features:
Lazard Global Listed Infrastructure Fund focuses investing on companies that have ‘Preferred’ characteristics, such as revenue certainty, profitability and longevity, derived from monopoly or monopoly-like underlying assets that are often regulated. The Fund aims to achieve total returns (including income and capital appreciation and before the deduction of fees and taxes) that outperform inflation, as measured by the Australian Consumer Price Index, by 5% per annum over rolling five-year periods.
- Invests in listed companies that own physical infrastructure (including concessions or long-term contracts to this effect); have assets predominantly invested in member countries of the Organisation for Economic Cooperation and Development and meet a minimum market capitalisation hurdle at the time of purchase
- The number of securities will generally range from 25 to 50 companies.
- Asset allocation : global securities (95% – 100%), Cash (0% – 5%).
- High risk/return investment.
manager_contact_details: Array
asset_class: Property and Infrastructure
asset_category: Global Listed Infrastructure
peer_benchmark: Property - Global Listed Infrastructure Index
broad_market_index: Global Infrastructure Index
structure: Managed Fund