The Property & Infrastructure Fund returned -3.1% in September, 0.3% behind the benchmark index, which returned -2.8%.   

Market backdrop 

The S&P Global Infrastructure Index returned -5.4% in September, Australian property -1.8% and New Zealand property -2.1%, compared with -0.3% for the S&P 500, as a sharp rise in bond yields weighed on rate-sensitive sectors. 

US 10-year Treasury yields rose 53 basis points to 5.3%, and the 30-year yield reached its highest level since 2004. Most of the move came from real yields (bond yields adjusted for expected inflation), reflecting higher expected policy rates rather than inflation. New Zealand and Australian 10-year yields rose 30 and 26 basis points, to 5.0% and 5.3% respectively. UK long-dated government bonds (gilts) fared better on signs the Bank of England would pause its sales of long-dated gilts. 

Highlight 

Port of Tauranga (+3%) was the largest contributor to relative performance. Its gain owed less to fresh news than to the market's continued digestion of a record FY26 result, reported in late August, and the shares held firm even as bond yields rose in New Zealand and offshore. Market sentiment improved after the result, which showed return on invested capital (ROIC, the profit earned on the capital employed in the business) rising to 6.6%, on track for the company's 7% target in FY27. Announced price increases by Port of Auckland also strengthen the case for Tauranga to lift its own prices, given it still earns below its cost of capital. Whilst cargo volumes remain soft, we believe pricing rather than volume will drive earnings growth over the medium term. 

Lowlight 

NextEra Energy (-8%) was the largest detractor from relative performance. Investors tend to value utilities partly like bonds, given their steady, regulated earnings, so the sharp rise in US Treasury yields during September weighed heavily on the sector. The S&P 500 Utilities index fell 4.8% in a single week late in the month, extending a year in which the sector has lagged the broader US share market by around 20%. NextEra fell more than the utilities index but in line with large regulated peers, pointing to interest rates rather than company-specific factors as the main cause. Company news was, if anything, supportive: management reiterated its 2026 earnings guidance and its target of at least 8% annual earnings growth through to 2032.