In this webinar, William Argent, manager of the TM Gravis UK Infrastructure Income Fund and senior research analyst Shayan Ratnasingam provide an update on the UK infrastructure sector, the market backdrop, fund performance over the past decade, and key changes to the portfolio.

You can watch the webinar replay here:

• The Fund provides income-focused exposure to the UK-listed infrastructure sector through a diversified mix of equities, bonds, REITs and closed-ended investment companies.
• The portfolio has a bias towards operational assets, government-backed or regulated revenue frameworks, and limited exposure to demand-based or volume-driven cash flows.
• Key structural themes represented in the portfolio include energy transition and security, digitalisation, demographic change (notably healthcare), and resource efficiency.

• The strategy invests exclusively in UK-listed, sterling-denominated securities, but some underlying assets will be based in other countries.
• While global infrastructure markets appear similar at a high level, the UK market is viewed as offering more direct exposure to asset-level infrastructure cash flows, with less equity beta than global infrastructure indices.

• The portfolio currently holds 26 positions and maintains meaningful inflation linkage through explicitly indexed revenues and other inflation-sensitive cash flows.
• Recent changes in the top holdings reflect relative performance, corporate activity and sector consolidation, including the merger of PHP and Assura.
• Equity exposure has been actively managed, with profits taken where performance has been strong, in order to prevent equity risk dominating overall portfolio outcomes.
• REIT exposure has reduced modestly due to M&A activity in the sector.

• Since inception in January 2016, the Fund has navigated a range of market conditions, including political uncertainty, interest rate volatility, the pandemic and shifts in energy prices.
• Over this period, the Fund has delivered positive performance in six out of ten calendar years.
• Equity beta versus the MSCI UK Index has remained low, typically in the 0.3–0.4 range, consistent with the Fund’s objective of limited equity sensitivity.
• Over the last 12 months, the Fund delivered a 14.66%total return , with positive contributions from all security types.

• Equities and REITs contributed most to returns on a per-unit-of-exposure basis, while closed-ended investment companies and bonds also contributed positively.
• M&A activity in the sector, including take-private transactions, provided additional support to performance.
• Renewable energy generators detracted modestly from returns, although income generation mitigated the impact on total returns.

• The Fund targets a 5% net yield, with fees taken from income.
• As at the end of January, the Fund’s trailing yield was 6.55%.
• Distributions for full year 2025 increased by just under 5% year on year.
• Income visibility remains supported by the contracted and regulated nature of underlying assets, with confidence expressed in near-term income delivery, although outcomes remain subject to dividend declarations.

• The UK government’s 10-year Infrastructure Strategy sets out £725 billion of planned public infrastructure spending, covering both economic and social infrastructure.
• The Strategy emphasises coordination across government, devolved authorities and the private sector, alongside planning reform, procurement initiatives and mechanisms to attract private capital.
• Established funding frameworks, including the Regulated Asset Base (RAB), Contracts for Difference (CfD), Cap and Floor and PPP models, continue to provide revenue visibility.
• Recent regulatory clarity in areas such as electricity market arrangements and renewable obligation indexation has reduced uncertainty, particularly for renewable energy assets.

• Private infrastructure fundraising in 2025 reached historically high levels, with capital concentrated in renewable-related strategies.
• Regulated assets such as power and transmission are more prevalent in listed markets, creating opportunities in public equities.
• The scale of private capital raises may drive continued M&A activity, including take-private transactions and public market carve-outs.
• Valuations across listed infrastructure remain attractive, with renewables and core infrastructure trading at elevated implied IRRs.

• The interest rate cutting cycle that began in 2024 has supported more recent capital performance in the sector.
• Lower reference yields would further enhance the relative attractiveness of infrastructure income and could support asset valuations through reduced discount rates.
• Yield spreads versus gilts and corporate bonds remain elevated, supporting the Fund’s income proposition.

• Regulated transmission and network assets remain attractive due to long-term capital programmes, five-year price control frameworks and inflation-linked revenues.
• Electrification trends are expected to drive sustained growth in electricity demand, particularly from residential, industrial and transport sectors rather than data centres.
• Infrastructure services companies with long-term framework agreements offer revenue visibility aligned with the Fund’s preference for contracted cash flows, although these positions are sized conservatively given their asset-light nature.

Important information

This article is issued by Gravis Advisory Limited (“GAL” or the “Firm”)), which is authorised and regulated by the Financial Conduct Authority. GAL’s registered office address is 24 Savile Row, London, United Kingdom, W1S 2ES. The company is registered in England and Wales under registration number 09910124.

The TM Gravis UK Infrastructure Income Fund (the “Fund”) is a sub-fund of TM Gravis Funds ICVC, which is a UK UCITS scheme and an umbrella company for the purposes of the OEIC Regulations. The Authorised Fund Manager of TM Gravis Funds ICVC is Thesis Unit Trust Management Limited (TUTMAN), Exchange Building, St John’s Street, Chichester, West Sussex, PO19 1UP. TUTMAN is authorised and regulated by the Financial Conduct Authority. GAL is the investment manager of the Fund.

Any decision to invest in a Fund must be based solely on the information contained in the Prospectus, the latest Key Investor Information Document and the latest annual or interim report and financial statements.

GAL does not offer investment advice and this article should not be considered a recommendation, invitation or inducement to invest in a Fund. Prospective investors are recommended to seek professional advice before making a decision to invest.

Your capital is at risk and you may not get back the full amount invested. Past performance is not a reliable indicator of future results. Prospective investors should consider the risks connected to an investment in a Fund, which include (but are not limited to) exchange rate risk, counterparty risk, inflation and interest rate risk and volatility. Please see the Risk Factors section in the Prospectus for further information.

This article has been prepared by GAL using all reasonable skill, care and diligence. It contains information and analysis that is believed to be accurate at the time of publication but is subject to change without notice. It is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction.