Lazard Global Listed Infrastructure (LAZ0014AU) Report & Performance

What is the Lazard Global Listed Infrastructure fund?

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.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For Lazard Global Listed Infrastructure

Lazard Global Listed Infrastructure Fund Commentary September 30, 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.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Lazard Global Listed InfrastructureLAZ0014AUManaged FundsProperty and InfrastructureGlobal Listed InfrastructureProperty - Global Listed Infrastructure IndexGlobal Infrastructure Index1.53 BN0.9%0.00%0.5%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Lazard Global Listed Infrastructure0.81%10.23%19.4%8.48%10%11.06%14.02%12.86%-4.98%-14.65%-44.95%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Lazard Global Listed InfrastructureProperty - Global Listed Infrastructure Index0.3%0.99%NA%NA%NA%1.083.47%5.4%0.960.92

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
Lazard Global Listed InfrastructureYes-https://www.lazardassetmanagement.com/-

Product Due Diligence

What is Lazard Global Listed Infrastructure

Lazard Global Listed Infrastructure is an Managed Funds investment product that is benchmarked against Global Infrastructure Index and sits inside the Property - Global Listed Infrastructure Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Lazard Global Listed Infrastructure has Assets Under Management of 1.53 BN with a management fee of 0.9%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Lazard Global Listed Infrastructure has returned 0.81% in the last month. The previous three years have returned 8.48% annualised and 12.86% each year since inception, which is when the Lazard Global Listed Infrastructure first started.

How is risk measured in this investment product?

There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Lazard Global Listed Infrastructure first started, the Sharpe ratio is NA with an annualised volatility of 12.86%. The maximum drawdown of the investment product in the last 12 months is -4.98% and -44.95% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.

What is the relative performance of the investment product?

Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Lazard Global Listed Infrastructure has a 12-month excess return when compared to the Property - Global Listed Infrastructure Index of 0.3% and 0.99% since inception.

Does the investment product produce Alpha over its Peers?

Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Lazard Global Listed Infrastructure has produced Alpha over the Property - Global Listed Infrastructure Index of NA% in the last 12 months and NA% since inception.

What are similar investment products?

For a full list of investment products in the Property - Global Listed Infrastructure Index category, you can click here for the Peer Investment Report.

What level of diversification will Lazard Global Listed Infrastructure provide?

Lazard Global Listed Infrastructure has a correlation coefficient of 0.92 and a beta of 1.08 when compared to the Property - Global Listed Infrastructure Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.

How do I compare the investment product with its peers?

For a full quantitative report on Lazard Global Listed Infrastructure and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Lazard Global Listed Infrastructure with the Global Infrastructure Index?

For a full quantitative report on Lazard Global Listed Infrastructure compared to the Global Infrastructure Index, you can click here.

Can I sort and compare the Lazard Global Listed Infrastructure to do my own analysis?

To sort and compare the Lazard Global Listed Infrastructure financial metrics, please refer to the table above.

Has the Lazard Global Listed Infrastructure been independently verified by SMSF Mate?

This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.

How can I invest in Lazard Global Listed Infrastructure?

If you or your self managed super fund would like to invest in the Lazard Global Listed Infrastructure please contact via phone or via email .

How do I get in contact with the Lazard Global Listed Infrastructure?

If you would like to get in contact with the Lazard Global Listed Infrastructure manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Lazard Global Listed Infrastructure. All data and commentary for this fund is provided free of charge for our readers general information.

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Historical Performance Commentary

Performance Commentary - August 31, 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.

Performance Commentary - July 31, 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.

Performance Commentary - June 30, 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.

Performance Commentary - May 31, 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.

Performance Commentary - April 30, 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.

Performance Commentary - March 31, 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.

Performance Commentary - February 28, 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.

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