Is the iSharesGlobal Infrastructure ETF on Track for Growth in 2025?

Infrastructure is regarded as a relatively safe investment bet in uncertain times, as governments including the US channel funds into the sector. However, the iSharesGlobal Infrastructure ETF has grown only 1.3% over the past 12 months.

• IGF fund rises 1.8% last week, as top holding Aena gains 5.3%.
• Aena’s share price climbs 27.4% over the last 12 months.
• Global infrastructure is set for long-term growth, according to J.P. Morgan and Macquarie.

The share price of Spanish airport operator Aena [AENA:MC] jumped 5.3% last week, helping drive the iShares Global Infrastructure ETF [IGF] up 1.8%.

Aena is the largest holding in IGF as of 23 February. The company’s share price has leaped 27.4% in the past 12 months. In January, the newspaper Expansion reported that Aena is considering buying Edinburgh airport.

The iSharesGlobal Infrastructure ETF tracks the S&P Global Infrastructure Index and gives investors exposure to 76 international companies focused on infrastructure in the fields of communication, water, electricity and transport services. As of 23 February, 40.9% of the portfolio focuses on transport, 38% on utilities and 20.6% on energy.

According to J.P. Morgan research, the urgent drive to decarbonise global infrastructure is among several forces bolstering a sector traditionally regarded as a relatively stable long-term bet. The IGF fund has crept up 3.1% in the last six months and 1.3% over the past 12 months.

Aena Share Price on Strong Form

Aena has a 6.1% weighting in the fund’s portfolio as of 23 February. The company is 51% owned by the Spanish government, and manages 46 airports in the country, making it the world’s leading airport operator in terms of passenger traffic. In 2022, Aena won the rights to operate 11 airports in Brazil.

For the first nine months of 2023, the company delivered €3.8bn in revenue, up 19.9% year-over-year. Net profit was up 2.2% to €1.1bn.

Aena’s passenger traffic numbers for its Spanish airports recovered faster from the effects of the pandemic than comparable European terminals in 2023. Passenger numbers reached 216.6 million for the January to September period, a rise of 17.6% year-over-year.

Australian-owned Transurban [TCL:AX] is the second-largest holding in the IGF fund, with a 5.1% weighting. Transurban also operates in the area of transport services infrastructure, as it builds and operates toll roads throughout Australia and North America.

On 7 February, Transurban posted its H1 2024 results, reporting that average daily traffic rose 2.1% year-over-year to hit a total 2.5 million trips for the period. It said proportional EBITDA of $1.3bn was underpinned by a 6.3% increase in proportional toll revenue growth to $1.8bn.

Transurban’s share price was up 2.2% last week and up 1% over the past 12 months.

Global Infrastructure Set for Growth

Factors including rising inflation and geopolitical tensions have ramped up uncertainty in many sectors. Infrastructure, by contrast, is often regarded as a safe bet.

According to a Macquarie Asset Management’s 2024 outlook report published in January, infrastructure is positioned to grow this year, due to its “defensiveness, ability to protect against surges in inflation, relatively high yield and robust policy support globally”.

State programmes include US President Joe Biden’s $1.2trn Infrastructure Investment and Jobs Act, which has earmarked money for everything from US roads to water and electricity.

The Global Infrastructure Hub says that, as of September 2022, 42% of public infrastructure funding across G20 countries is focused on transport, followed by 17% on social infrastructure, such as healthcare, housing and education.

At TipRanks, the IGF fund is rated a ‘moderate buy’, based on a consensus among 77 ratings for its component stocks.

Aena SME is rated as a ‘strong buy’ according to a consensus of six analysts, while Transurban is rated a ‘hold’, based on a consensus of eight analysts.