While emerging markets are often considered volatile, Utilico Emerging Markets co-manager Jacqueline Broers (pictured) describes the investment trust as the ‘steady Eddie’ of EM offerings.
The £420m vehicle invests in infrastructure and utilities across the emerging markets universe. It plays on global infrastructure mega-trends, which feed into the growth drivers of the sector.
As Russia’s invasion of Ukraine enters a third year, energy security and deglobalisation remain major themes across both developed and emerging markets. “It’s opened up everyone’s eyes to energy security,” says Broers. “That’s also been a reason for a big push into energy investments in our portfolio.
“Everyone thinks deglobalisation is a negative on the global trade side, but global trade is going to continue. Countries will still need to trade with one another. We’re not self-sufficient, but actually we see that as an opportunity.
“Deglobalisation is really pushing countries to reassess their energy mix, to try and make sure they are more self-sufficient – and that’s providing us with an opportunity.
“We are also seeing this with digitalisation. Over the past few weeks, the AI DeepSeek story has hit the news. As a result, countries are reassessing where they’re getting chips from and how they are being self-sufficient in ensuring they’ve got an infrastructure framework to support themselves.”
Tomorrow’s world
Broers was appointed co-manager alongside Charles Jillings in January, though she has been with ICM, UEM’s investment manager, for over 14 years. “We invest in the infrastructure today, which supports tomorrow’s innovation. I hate that phrase, but it’s very true when you look at data centres.
“We have always invested in data centres, because once the centre is built, and once the customers are in, they are very sticky. They don’t tend to move because it’s very difficult for them to do so. As long as capacity can be added, then it’s a positive.”
Broers highlights Hong-Kong-based SuneVision Holdings as an example in the portfolio of a data centre that is benefiting from global demand for artificial intelligence.
“SuneVision has six data centres, and it recently brought a further two online. We like it because of the location in Hong Kong, sitting on the cusp of China – often you need data centres near to the hub of where most of the activity is happening.
“On the back of DeepSeek and the stories about China now having its own AI platform, SuneVision is up 90% in one month. It has capacity to expand and with the way the model works, there is the capacity to start adding in customers.
“It has increased its capacity by 50%, but that’s not been utilised. Now it’s adding in customers, the operational leverage will come through. The revenue will be achieved but the costs won’t increase as much, so it will fall to the bottom line and it will de-leverage quickly. It is a company that’s very attractive to us at the moment.”
At the end of January, SuneVision made up 1.5% of the Utilico Emerging Markets portfolio.
This article originally appeared in the March issue of Portfolio Adviser magazine