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

The Fund currently invests in 25 listed companies operating at the intersection of real estate and technology. These companies own physical assets that are vital to the functioning of the digital economy and are active across specialist sub-sectors including: logistics (39.4% portfolio weight), data centres (19.5%) and mobile communication towers (25.1%)

Over the course of the month, the NAV of the Fund increased by 2.4% (C Acc GBP). Since launch, the NAV has increased by 11.2% (C Acc GBP), compared to a rise of 18.5% for the global real estate index¹.

Markets continued to improve in May, with U.S. equities pushing further into record territory as a tense but improving geopolitical backdrop gave way to increased risk appetite. Hopes for a ceasefire between the U.S. and Iran eased fears around access to the Strait of Hormuz, causing crude prices to fall as supply concerns receded. While the path to a ceasefire remains fragile, with President Trump publicly shrugging off the possible collapse of the negotiations, equities remained positive. Global stocks rallied on continued AI leadership, with the Nasdaq up more than 8% in May and the S&P 500 experiencing its ninth straight week of gains.

Most sub-sectors delivered positive returns during the month. The mobile communication towers sub-sector was up 3.8%, followed by logistics and networks, up 1.5% and 0.8% respectively. The data centres sub-sector fell 0.5%.

During the month, the Fund Manager introduced corporate bonds to the Fund. The purpose is to increase the yield of the Fund and to reduce volatility without diluting exposure to the companies which own physical assets vital to the digital economy. As part of this update to the Fund’s strategy, Albane Poulin joined the team as Fixed Income Fund Manager.

The six bonds added were all issued by companies in which the Fund already holds an equity position, for example Cellnex, Equinix and Goodman. In each case the bonds are investment grade and provide an attractive yield pick-up compared to the equity dividend yield on offer, especially on a currency hedged basis. In the case of the Goodman bond, which pays a 4.25% coupon and matures in 2030, the yield pick-up is more than 4%. At present, the bond basket amounts to 13.7% of the Fund and delivered a return of 1.3% during May. In order to free up capital to build the basket, the Fund Manager sold seven equity positions.

With the addition of bonds, the philosophy of the Fund will remain the same. Bonds represent an enhancement of the Fund’s toolkit, enabling the Manager to express the same fundamental views on the digital economy across different parts of the capital structure.

Overall, the Fund Manager maintains a positive outlook on the digital infrastructure sector, primarily due to the strong performance of underlying portfolio assets. As such, the digital infrastructure sector remains a key investment area for any investors seeking long-term returns.

¹MSCI World IMI Core Real Estate IMI GBP