During the third quarter of 2025, the global listed infrastructure investment landscape experienced varied performance, with some sectors demonstrating strong growth while others faced challenges. This period saw the overarching index, the S&P Global Infrastructure Net Index, achieve a return of 3.50%, highlighting a generally positive, albeit moderate, market environment for infrastructure assets. However, the Northern Funds Multi-Manager Global Listed Infrastructure Fund notably diverged from this benchmark, reporting a lower return of 2.60%.
This underperformance by the Fund was primarily attributed to specific strategic allocations and geographical weighting. An overweight position in the United Kingdom, coupled with an underweight stance in Canada and non-benchmark allocations in communications towers, significantly impacted the fund's returns. Despite these challenges, there were also areas of positive contribution, particularly from successful stock selection within the United States, including non-benchmark exposures to U.S. railroads, and effective stock choices in the highways and rail tracks segment, underscoring the complexities of global infrastructure investing.
Global Infrastructure Performance Overview
In the third quarter of 2025, the global listed infrastructure sector demonstrated a moderate return of 3.50%, as measured by the S&P Global Infrastructure Net Index. This period showcased a diverse performance across sub-sectors, with utilities and airports emerging as the leading performers, indicating robust activity and investor confidence in these essential services. In contrast, sectors such as highways and rail tracks, along with independent power producers (IPPs), experienced a downturn, trailing behind the overall market performance. This mixed landscape underscores the varied dynamics influencing different segments of the global infrastructure market, reflecting specific operational challenges, regulatory changes, or shifting investor preferences within these areas.
The overall market environment for global listed infrastructure in Q3 2025 was characterized by these contrasting performances. While the foundational utilities and burgeoning airport sectors capitalized on favorable conditions or strategic advancements, the segments related to terrestrial transportation and certain energy production faced headwinds. These could range from project delays, increased operational costs, or sector-specific policy shifts that impacted their profitability and investor appeal. Such a nuanced performance profile highlights the importance of diversified investment strategies and diligent sector analysis when navigating the global infrastructure investment space, pointing to a quarter where resilience in some areas offset weaknesses in others, resulting in a net positive but varied outcome for the broader index.
Northern Funds' Performance and Influencing Factors
The Northern Funds Multi-Manager Global Listed Infrastructure Fund registered a return of 2.60% in the third quarter of 2025, falling short of its benchmark, the S&P Global Infrastructure Net Index. This underperformance was primarily driven by strategic positioning that deviated from the benchmark's allocations. Key factors included an overweighting of investments in the United Kingdom, which perhaps faced specific economic or market challenges during the quarter, and an underweighting in Canada, suggesting missed opportunities in a potentially stronger performing market. Furthermore, the Fund's non-benchmark exposure to communications towers also played a significant role in its trailing returns, indicating that these specialized investments did not perform as anticipated relative to the broader market.
Despite these areas of underperformance, the Fund's overall returns were bolstered by several successful investment decisions. Strong stock selection within the United States, particularly through non-benchmark investments in U.S. railroads, proved to be a positive contributor. This suggests that targeted, high-conviction picks within certain domestic sectors yielded favorable results, mitigating some of the negative impacts from other strategic choices. Additionally, effective stock selection within the highways and rail tracks segment also contributed positively to the Fund's performance, indicating that even within a lagging sector, astute investment choices can lead to beneficial outcomes. This quarter's results underscore the intricate balance between strategic asset allocation and individual security selection in fund management, especially within a complex and diverse asset class like global listed infrastructure.
