Amidst the tariff turmoil, co-portfolio managers of the Utilico Emerging Markets Trust, a UK-listed investment trust that invests in utilities and infrastructure assets in emerging markets, outline why emerging markets have performed relatively well.

In an interview with this news service, Charles Jillings and Jacqueline Broers, co-portfolio managers of the Utilico Emerging Markets Trust, highlighted why their portfolio remains well-diversified across geographies. It is focused on defensive sectors such as utilities and infrastructure, positioning it to weather near-term volatility more effectively than the broader market.

Although emerging markets remain undervalued and underrepresented in investors’ portfolios, they are increasingly being supported by global infrastructure megatrends, Jillings and Broers said. The growth of the middle-class is driving the need for better social infrastructure in these countries while decarbonisation of the energy matrix is supporting strong economic growth. Rapid digital adoption is also accelerating demand for digital infrastructure, they said. Emerging markets also have an increasing importance in the share of world trade, they continued.  

Despite macro volatility and geopolitical uncertainty, notably in the wake of US President Donald Trumps recent tariff hikes, Jillings and Broers believe that investment in infrastructure will continue.

Utilico Emerging Markets Trust (UEM)
Jillings and Broers co-manage the Utilico Emerging Markets Trust (UEM), which focuses on assets benefiting from long-term infrastructure megatrends providing potential for sustainable growth, such as social and digital infrastructure, energy growth and transition, and global trade.

Despite the tariff turmoil, Jillings and Broers believe that UEM’s performance and dividend history is still attractive to investors and the trust remains invested across the globe, with around 22 per cent of the portfolio concentration in Brazil. This includes an investment in Brazilian waste management company, Orizon, which operates 17 sanitary landfill sites.These sites collect and use biogas – an operation which generate carbon credits.

UEM has a strong interest in Latin America, where companies can exhibit monopolistic characteristics. They highlighted Mexico’s growth potential and faster-than-anticipated economic recovery last year, but they have reduced their exposure there recently in the wake of the tariff turmoil. They also invest in Aguas Andinas, the largest sanitation company in Chile. 

Jillings and Broers are invested in the growth-oriented market of India and have increased their exposure there. In particular, they invest in IndiGrid, an infrastructure investment trust, focused on the development and operation of transmission lines, solar generation and battery energy storage in India. They believe it is well positioned to benefit from India’s rising power demand and green transition. The country is favoured by other wealth managers such as French asset manager Amundi due to its strong GDP growth and lower exposure to US trade. See more commentary here.

Jillings and Broers – also keen on the Philippines – are planning to increase their exposure there. One stock includes Philippines-listed International Container Terminal Services (ICT) which acquires, develops, manages and operates small- to medium-sized container ports and terminals. It operates 33 terminals in 20 countries. They are also invested in Manila Water Company.

They are underweight in China, in view of the tariff turmoil and uncertainty. One stock includes SUNeVision, the largest data centre operator in Hong Kong with eight data centres and two cable landing stations, capitalising on the digital infra trend.

Within Eastern Europe, Jillings and Broers like Poland, which benefited from Germany’s and the EU’s recent hike in defence spending. They also have exposure to Greece.