Investing in Stability: How Listed Infrastructure Outperforms in Turbulent Times

We navigate a complex 2026 defined by uneven economic signals geopolitical tensions, including the Iran war and the power demands of the AI boom.

Investors are searching for stability.

Global asset infrastructure is currently standing out as a safe haven.

Now this asset class outperformed global equities by over 15% during the 2022 stagflation years and also in accelerating structural tailwinds like AI-driven power demand and massive grid modernization.

And the set look compelling.

Well this morning Bloomberg reporting that Saudi Arabia's key east-west oil pipeline has been hit by a drone, and that pipeline has become a crucial part of Saudi Arabia's oil export business since Iran all but shut down traffic through the Strait of Hormuz.

Well joining me live here at the New York Stock Exchange this morning is Emily Foshag, a Portfolio Manager at Principal Asset Management Equity Team.

Emily, good morning.

Thank you so much.

Well you're joining us on a day where we're counting down.

The market open and we are looking at stock futures rallying and oil plunging, so that really does speak to a lot of this volatility we're seeing right now.

But when it comes to listed infrastructure, for viewers who are not familiar, break this down for us.

Yes, absolutely.

So as you say, this is a great environment for listed infrastructure.

I think any time you have uncertainty, anytime you have volatility, anytime you have events that are somewhat unpredictable, geopolitical issues.

Tariffs as we saw last year, infrastructure really provides that ballast in a portfolio.

What we're doing is we're investing in companies that have highly regulated and contracted cash flow streams, and that ultimately means that you have the ability to deliver relatively similar fundamental growth outcomes regardless of what's going on in the macroeconomic environment.

So when we're talking about infrastructure, how does the picture differ from the US versus other regions in the globe?

So great question.

I mean, many of the structural drivers are very similar, and so you mentioned in your opening AI power demand being a big driver.

You see utilities offering pretty significant earnings growth, and AI power demand is incremental to that relative to some of the structural trends that we've seen over the preceding decade.

Energy transition, for example, electrification.

It's interesting if I go back 15.

Years ago, regulated utilities used to grow earnings 3 to 5%.

That was seen as expected.

That was good.

Investors would clip their coupon on the dividend yield.

Now in some markets, whether it's Europe or here in the US, you see regulated utilities growing earnings in the low double digits, potentially even the mid-teens.

And again it's a trifecta of these really compelling demand drivers coming together electrification.

Energy transition and also demand for AI power and you're joining us at a time when we're focused on the Middle East.

So hopefully we'll see progress as that two week ceasefire continues.

But in the meantime, I do want to get your take on LNG export infrastructure as well as alternative energy.

Tell us what's happening there.

Yes, so I think the thing to keep in mind, particularly as relates to geopolitical events in Iran is no different.

It's very difficult to have an edge as it relates to either predicting the outcomes or the duration of these types of events.

And so our job ultimately is twofold.

It's to position portfolios to perform well regardless of what those outcomes look like, right, which is a risk management exercise, and then also identify the individual stocks that have a change in their. outlooks as a result of geopolitical events and one of those areas, as you point out that we're more excited about post the start of the conflict really has been LNG exports.

This has been a meaningful, kind of fundamental tailwind for natural gas demand here in the US for the past 1015 years.

However, what has changed is you've had actual physical damage to natural gas infrastructure in the Middle East region.

And also anytime you have these geopolitical events, you need to think about the future potential volatility and so our expectation is there's going to be more demand for US LNG exports going forward than there were pre-conflict.

And another area I do want to get your take on as we count down to the opening bell here is uh data center demand and power demands of artificial intelligence.

So we continue to hear about the demand for energy when it comes to AI.

So what's actually happening on the ground here in the US?

So we're very excited about this as a driver.

I gave you those stats on regulated utilities and data center demand really being incremental to that.

I think if I look back over the last couple of years, 23 was the first year that regulated utilities were talking about data centers, but it was still fairly opaque, still early.

24 then became the year where companies integrated or began to integrate data center.

And into their capital investment plans and now what we're seeing is strong visibility for low to mid teens earnings growth at some of these utilities.

It's not every utility, right, so selectivity matters and I think that's where we come in as stock pickers which are the companies that are best positioned to benefit from this opportunity and which are the companies for which those expectations are not yet reflected in the stock price.

That's really where we get excited as investors and Emily, finally, before I let you go, I do want to get your take on transportation in particular railroads.

So give us your take in less than 60 seconds.

Absolutely.

So railroads were more positive now than we were 1218 months ago.

You've had a pretty prolonged freight recession here in the US, a couple of things to flag, I think under the current presidential administration, the potential for M&A.

Consolidation and what that means for service outcomes and ultimately profitability has been exciting and that's led us to rethink the risk reward in the sector.

We also have seen positive data points on ISM manufacturing and that should be positive for freight rail demand.

So overall I think more positive today than we were 18 months ago.

Well Emily, great to have you on the show.

Hopefully we'll have you back for a longer discussion next time.

Thank you so much for joining us.

Thank you.