What investors should expect when investing in infrastructure: yield

Magellan Asset Management

December 2025

(10-minute read)

Dependable earnings growth is a core characteristic of the high-quality listed infrastructure companies in which we invest. Throughout past cycles we have seen consistent, solid returns. Given the earnings profile, operating models and potential for inflation protection that underpin these companies' assets, we expect this to continue. Moreover, we see sustained annual returns of CPI plus 5.0% over the investment cycle ahead for this asset class.

This expected return, of approximately 7.0%-8.0% annually, can be broken down into three key components: yield, inflation protection and capital growth. Yield is one of these building blocks and is unpacked in more detail below.

High-quality listed infrastructure companies provide consistent yield

In looking at historical data, high-quality infrastructure companies in our portfolio¹ delivered an average dividend yield of close to 4.0% over the past decade.

We've also seen that this yield moves in a tight range, through both up and down economic cycles. For example, in 2020, with the covid shock to the economy, and sizeable interest rate cuts, the average dividend yield for our portfolio¹ held in a range of 3.5%-4.5%.

Subsequently, in 2022-2023, when there was an inflation surge and sharp rises in interest rates, the average yield was maintained in this range. We see similar patterns in economic cycles further back in time. For example, in the global economic upswing in 2015-2016, which saw commodity prices rally, our portfolio again recorded an average dividend yield in the 3.5%-4.0% range.

In looking at historical data, high-quality infrastructure companies in our portfolio¹ delivered an average dividend yield of close to 4.0% over the past decade.

We've also seen that this yield moves in a tight range, through both up and down economic cycles. For example, in 2020, with the covid shock to the economy, and sizeable interest rate cuts, the average dividend yield for our portfolio¹ held in a range of 3.5%-4.5%.

_{Source: Bloomberg. Magellan. The numerical information above is based on a representative portfolio. The representative portfolio is an account in the Global Core Infrastructure AUD Hedged Composite that closely reflects the portfolio management style of the strategy.}

Subsequently, in 2022-2023, when there was an inflation surge and sharp rises in interest rates, the average yield was maintained in this range. We see similar patterns in economic cycles further back in time. For example, in the global economic upswing in 2015-2016, which saw commodity prices rally, our portfolio again recorded an average dividend yield in the 3.5%-4.0% range.

These examples highlight the stability of divided income yields to investors. The yield returned is consistent and largely unaffected by market cycles. Even in significant upswings and downdrafts, the yield does not deviate much from the long-term average of 4.0%. This is important, as it highlights the role of high-quality listed infrastructure as a diversifier in an investor's portfolio.

Stable businesses support stable dividends

Infrastructure companies can deliver consistent dividends because of the nature of their underlying assets. Fundamentally, infrastructure businesses provide essential services, which support predictable demand and income (for example, water services, or electricity). Earnings are typically secured in a regulated or non-competitive structure. For example, the Magellan Global Listed Infrastructure strategy invest in companies with the bulk of earnings (75% or more) sourced from high-quality infrastructure businesses that are predominantly natural monopolies or concession-driven businesses. Demand for the services these assets provide is typically stable. At the same time, many of these businesses have a regulated component to their earnings, which varies in its breadth but provides another parameter for certainty on earnings. This includes the regulated revenue allowance for utilities, regulated toll increases for toll road operators and regulated aero revenues for airports. As a result, these companies have a relatively stable cash flow profile.

To see what this looks like in practice, let's look at a few sub-sector examples. Toll roads illustrate this well, offering captive traffic flows and consistent revenue and earnings growth and reflecting operating leverage in their business model. The 407ETR toll road in Canada, owned by Ferrovial, is another example, shown in the chart below.

This road, like other high-quality toll road assets, captures the bulk of growth in traffic in its catchment. With the competing free road typically full at peak travel times, the toll road provides users with shorter transit times, with the added benefit that the concession allows for peak pricing and for different tolls for different segments based on demand.

_{Source: Magellan analysis of company data}

Regulated utilities show a similar dynamic, with their earnings linked to the growth of their regulated asset base. These companies invest in new projects, with spending approved by their regulator, to meet growing power demand, improve asset resilience, or upgrade existing infrastructure. These companies then typically earn an agreed rate of return on this asset base - of around 9.0%-10% for US integrated power companies like Xcel Energy and WEC Energy.

High-quality airports (such as European airports including Aena) operate in regimes that entitle the operating company to earn predictable returns. This includes an entitlement to earn a fair rate of return on invested capital for aviation activities and provisions for minimum annual guarantees for commercial activities, such as retail.

Looking at these examples, we can see that well-defined infrastructure companies have the advantage of high barriers to entry, pricing power and a regulated operating environment. These conditions allow these companies to have stable revenue linked to their asset base rather than to the business cycle. Under this distinct model, infrastructure companies can then pay predictable distributions to investors.

Secular trends drive yield generation

This is a snapshot of the translation of predictable demand and high-quality businesses into dividend yield at a point in time. Over time, there are clear catalysts for these companies to continue to generate yield, providing for durable returns to investors over an investment cycle.

In simple terms, steady growth in earnings over time can support higher dividends. The dividend yield can therefore comfortably hold ground for these companies, at around 4.0%. Major secular trends in the market at any given time can be linked directly to the ability of infrastructure companies to generate predictable earnings over the long term.

The rise of AI and ongoing demand for renewable energy generation are two such major trends. AI is expected to push electricity demand higher for years to come. That gives integrated utilities room to invest more, expand their asset base, and earn more on that capital. These allowable returns ultimately underpin dividends to investors. The resilience of renewable energy investment, reflecting improving cost competitiveness, also translates into greater capital investment for integrated utilities and transmission and distribution companies.

As these are regulated utilities, we see robust growth in capex again driving solid earnings growth over the longer term. Historically, this earnings growth has translated into dividend growth for investors (for example, with US regulated utilities typically recording 5.0-7.0% EPS growth, and similar dividend growth), which also helps to sustain dividend yield over time.

This is shown in the chart below for regulated utility Xcel Energy. The company demonstrates consistent dividend yield and dividend growth in the range of 5.0-7.0%, which is in line with its earnings growth over the last decade.

_{Source: Magellan analysis of company data}

In addition, infrastructure businesses are highly cash generative, which supports dividend yield generation for investors over time. This is especially the case for transport infrastructure assets, which have often high levels of free cash flow. Management of these businesses can use the excess cash to maintain stable dividend yields to investors through special dividends and share repurchases, even in times of unfavourable stock price performance.

Durable yield and diversification benefits

We believe infrastructure investors can expect consistency in income over time, with some key drivers in place for self-sustainment. At around 3.5-4.5%, we view this to be an attractive income return and would highlight our expectations of limited deviations (up or down) from this dividend yield range. In fact, reflecting its business model and the nature of income streams, infrastructure is not typically seen by investors as the high-growth part of the portfolio. Rather, it plays the role of the consistent, slower-growing diversifier that can provide compounding and real capital growth over time. Infrastructure has also demonstrated outperformance in certain market environments.

We believe that high-quality listed infrastructure can be expected to provide a dividend yield of ~4.0%. This represents approximately 50%-60% of the CPI plus 5.0% return (7.0%-8.0% return) we would expect for the infrastructure asset class and underscores our confidence in achieving this outcome over the medium to long term.

By Magellan Investment Team

_{1 Magellan Core Infrastructure Strategy (hedged and in AUD).}

Funds operated by this manager:

Magellan Global Fund (Open Class Units) ASX:MGOC , Magellan Infrastructure Fund , Magellan Global Opportunities Fund No.2 , Magellan Infrastructure Fund (Unhedged) , Magellan Global Fund (Hedged) , Magellan Core Infrastructure Fund , Magellan Global Opportunities Fund Active ETF (ASX:OPPT)

Important Information: This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 trading as Magellan Investment Partners ('Magellan Investment Partners') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation.  This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement ('PDS') and Target Market Determination ('TMD') and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to a Magellan Investment Partners financial product may be obtained by calling +61 2 9235 4888 or by visiting www.magellaninvestmentpartners.com

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any financial product or service, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of a Magellan Investment Partners financial product or service may differ materially from those reflected or contemplated in such forward-looking statements.

This material may include data, research and other information from third party sources. No guarantee is made that such information is accurate, complete or timely and no warranty is given regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material.  Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan Investment Partners or the third party responsible for making those statements (as relevant). Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Magellan Investment Partners will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material.

Any third-party trademarks contained herein are the property of their respective owners and Magellan Investment Partners claims no ownership in, nor any affiliation with, such trademarks.   Any third-party trademarks contained herein are the property of their respective owners, are used for information purposes and only to identify the company names or brands of their respective owners, and no affiliation, sponsorship or endorsement should be inferred from such use. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan Investment Partners. (080825-#W17)

Expert Analysis of the RBA's December 9 Rate Decision

FundMonitors.com

December 2025

Chris Gosselin, CEO of FundMonitors.com, speaks with Nicholas Chaplin, Director and Portfolio Manager at Seed Funds Management, and Renny Ellis, Director & Head of Portfolio Management at Arculus Funds Management.

In this discussion, they share their perspectives on the RBA's recent rate decisions, whether cuts came too early, and how inflation dynamics, subsidies, and employment data are shaping economic expectations. They also explore the likelihood of future rate movements and what investors should watch heading into 2026.

Market Commentary - November

Glenmore Asset Management

December 2025

(2-minute read)

Funds operated by this manager:

Glenmore Australian Equities Fund

AI fever hits bond markets - tactical play or a bigger bubble?

abrdn

December 2025

(3-minute read)

Funds operated by this manager:

abrdn Sustainable Asian Opportunities Fund , abrdn Emerging Opportunities Fund , abrdn Sustainable International Equities Fund , abrdn Global Corporate Bond Fund (Class A)

Expert Analysis of the RBA's December 9 Rate Decision

FundMonitors.com

December 2025

Chris Gosselin, CEO of FundMonitors.com, speaks with Nicholas Chaplin, Director and Portfolio Manager at Seed Funds Management, and Renny Ellis, Director & Head of Portfolio Management at Arculus Funds Management.

In this discussion, they share their perspectives on the RBA's recent rate decisions, whether cuts came too early, and how inflation dynamics, subsidies, and employment data are shaping economic expectations. They also explore the likelihood of future rate movements and what investors should watch heading into 2026.

How to get the most from Fundmonitors 

Webinar Recording

FundMonitors.com

04 August 2025

To help you get a better understanding of the www.fundmonitors.com database, watch this webinar recording to help you learn to navigate the database and get the most out of its powerful fund analytics. 

The webinar covered the following:

• Accessing the site
• Selecting and comparing funds
• Peer group analysis
• Building and managing a watchlist
• Creating a portfolio
• FACTORS Research

If you like to see just 1 aspect of the webinar feel free to jump to the relevant timestamp:

Chris Gosselin speaks with Alan Pullen from Magellan Investment Partners about the philosophy behind the Magellan Global Opportunities Fund. Alan explains how the team focuses on high-quality global businesses, disciplined valuation, and long-term investing-especially important amid today's AI-driven market volatility.

Funds operated by this manager:

Magellan Global Fund (Open Class Units) ASX:MGOC , Magellan Infrastructure Fund , Magellan Global Opportunities Fund No.2 , Magellan Infrastructure Fund (Unhedged) , Magellan Global Fund (Hedged) , Magellan Core Infrastructure Fund , Magellan Global Opportunities Fund Active ETF (ASX:OPPT)

What Really Causes a Market Crash

Marcus Today

October 2025

4-minute read

What could tip the market over? Well, let me ask you this question - what caused the 1987 crash?

Don't know? No, you don't know because there wasn't one specific reason for the 1987 crash.

When the dam cracks, you don't go looking at the first drop that came through the first crack and analyse it to find out why it cracked. Because the reason the dam cracked is that, in the year and a half prior to the 1987 crash, the Australian market went up over 100%.

What cracked the dam and caused the crash was a build-up of pressure over a long period of time, which eventually broke. Analysing the first drop - why it happened - was irrelevant.

We were sitting in Buckmaster & Moore in the UK, and we had one guy on the desk who was a young bloke.

He had a client in the US, and doing a few tickets in those days was meaningful because the commissions were about 1.6%, and they went up if the order was larger. Anyway, this young guy started ripping off red tickets - red ticket, red ticket - writing out another one, couldn't write fast enough.

He was on the direct line to the dealer at one particular institution - red ticket, another red ticket, another order, another order.

By lunchtime, the partners, who sat on the plinth higher than everybody else (such was the hierarchy in those days), took us all out to lunch at the Mithras Bar for pints of Pimm's to celebrate how much business he'd done.

We came back from lunch, and he started writing more red tickets - more and more. The hilarity and joy turned to concern. The partners started ringing up people in the industry to check whether these orders were legitimate.

They rang the bosses of the dealer at the fund manager, and they said, "Yes, it's okay - keep doing the orders. They're legitimate. He's not a rogue trader."

So, the first thing the partners did was start selling their own shares. Then they started ringing their best clients and saying, "This fund manager's selling - you need to start selling, because the market is way up there."

And this big institutional fund manager started to sell.

Before you knew where you were, everybody was trying to get ahead of everybody else selling.

It turned out that these partners had rung other brokers to ask, "Are you, by any chance, getting a particular institution selling a lot of stock?" And they said yes. It turned out that this institution, which was US-based, had sat in its ivory tower in New York and decided it was going to reduce its equity exposures across the world.

That meant, in the UK, it had so many billion pounds of stock to sell. It passed the order to the UK office, and the UK office, in order to get it done, had to go to every broker and give them a whole load of orders - and everything cascaded from there.

That's what starts a sell-off - a big institution, part of the herd, takes the lead and starts selling.

So, what we have to watch out for when the market's up here - and we're not in a bubble at the moment, but we're certainly elevated - is this:

For some reason, and it won't necessarily be logical or obvious (and the guy who writes the morning report in the newspaper won't know, but he'll make something up), someone is going to sit in an asset allocation meeting in New York or Singapore or Sydney and decide that their funds management group, which is running hundreds of billions, is going to start exiting Big Tech or exiting equities.

And before you know it, you're going to see sell orders coming into the market.

The moment the herd - already sensitive to a top - hears that, it'll join in, and the market will cascade.

It may not need a catalyst. There may be no headline that day. It'll just start.

If it hasn't really got a catalyst, it probably won't last long - it'll probably come back pretty quickly. But it can happen when the market's under pressure, as it is now, with this year's performance and the benefit of the doubt still being given to Big Tech earnings.

All the Big Tech stocks are priced for perfection - and many others as well. We're vulnerable to some big fund manager deciding to sell.

And everybody will chase them.

We're doing 200 miles an hour with our hair on fire. Fund managers aren't stupid - they know one of them will change their mind.

Look out for that day.

DISCLAIMER: This content is for general information purposes only and does not constitute personal financial advice. Please consider your own circumstances or seek professional advice before making investment decisions.

Funds operated by this manager:

Marcus Today Equity Income SMA , Marcus Today Growth SMA

Magellan Global Quarterly Update

Magellan Asset Management

October 2025

(Viewing time: 17 mins)

Head of Global Equities Arvid Streimann and Portfolio Manager Casey McLean provide an update on the Magellan Global Fund, reflecting on a quarter dominated by strong equity market performance and heightened investor focus on AI and semiconductor companies.

Funds operated by this manager:

Magellan Global Fund (Open Class Units) ASX:MGOC , Magellan Infrastructure Fund , Magellan Global Opportunities Fund No.2 , Magellan Infrastructure Fund (Unhedged) , Magellan Global Fund (Hedged) , Magellan Core Infrastructure Fund , Magellan Global Opportunities Fund Active ETF (ASX:OPPT)

Important Information: This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 trading as Magellan Investment Partners ('Magellan Investment Partners') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation.  This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement ('PDS') and Target Market Determination ('TMD') and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to a Magellan Investment Partners financial product may be obtained by calling +61 2 9235 4888 or by visiting www.magellaninvestmentpartners.com

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any financial product or service, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of a Magellan Investment Partners financial product or service may differ materially from those reflected or contemplated in such forward-looking statements.

This material may include data, research and other information from third party sources. No guarantee is made that such information is accurate, complete or timely and no warranty is given regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material.  Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan Investment Partners or the third party responsible for making those statements (as relevant). Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Magellan Investment Partners will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material.

Any third-party trademarks contained herein are the property of their respective owners and Magellan Investment Partners claims no ownership in, nor any affiliation with, such trademarks.   Any third-party trademarks contained herein are the property of their respective owners, are used for information purposes and only to identify the company names or brands of their respective owners, and no affiliation, sponsorship or endorsement should be inferred from such use. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan Investment Partners. (080825-#W17)

Chris Gosselin, CEO of FundMonitors.com, speaks with Simone Haslinger, Chief Executive Officer at East Coast Capital Management.

Simone shares how clear, sustained trends across commodities, precious metals, and tech equities powered a standout quarter for East Coast Capital, emphasizing the strength of their fully systematic, data-driven strategy that thrives on market momentum and delivers steady, uncorrelated returns.

Funds operated by this manager: ECCM Systematic Trend Fund

Expert analysis on what the RBA will do next Tuesday, November 4

FundMonitors.com

31 October 2025

Chris Gosselin, CEO of FundMonitors.com, speaks with Nicholas Chaplin, Director and Portfolio Manager at Seed Funds Management, and Renny Ellis, Director & Head of Portfolio Management at Arculus Funds Management.

In this insightful discussion, the trio unpack the latest Australian inflation figures for the September quarter and consider what they might mean for interest rates, economic momentum, and investor sentiment heading into 2025. With the Reserve Bank's next move under close scrutiny, the conversation explores the data behind the numbers -- and what could lie ahead for markets and monetary policy.

Airlie Small Companies Fund Quarterly Update October 2025

Airlie Funds Management

October 2025

(Viewing time: 11 mins)

Portfolio Manager Will Granger discusses the recent quarter for the Airlie Small Companies Fund. Will explains the fund's disciplined focus on high-quality, financially strong businesses outside of the mining sector, and highlights a strong reporting season across core holdings. 

Funds operated by this manager:

Airlie Australian Share Fund , Airlie Small Companies Fund

Important Information: 

This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 trading as Airlie Funds Management ('Airlie') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation.  This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement ('PDS') and Target Market Determination ('TMD') and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to an Airlie financial product or service may be obtained by calling +61 2 9235 4760 or by visiting www.airliefundsmanagement.com.au.

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any financial product or service, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of an Airlie financial product or service may differ materially from those reflected or contemplated in such forward-looking statements.

This material may include data, research and other information from third party sources. Airlie makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Airlie. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Airlie will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material.

Any third party trademarks contained herein are the property of their respective owners and Airlie claims no ownership in, nor any affiliation with, such trademarks.   Any third party trademarks that appear in this material are used for information purposes and only to identify the company names or brands of their respective owners. No affiliation, sponsorship or endorsement should be inferred from the use of these trademarks.  This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Airlie.

One Theme That Can Make You Rich

Marcus Today

October 2025

4-minute read

Back in 2005, I had a client who became quite famous at Bell Securities because he was very good at investing. He was a fairly young guy who had inherited $500,000, and he lived in Bali. He had no stock market experience, but he had a lot of time in Bali.

He turned his hand to the stock market, found me as a broker (I think I was in the media at the time), and used me for information. He didn't really want advice. If I rang him up with my lame morning meeting ideas -- that he should buy Leighton Holdings because our analysts thought it was cheap -- he would say, "Look Marcus, what's the drive? Are its fundamentals changing for the better?" And I would say, "I don't know."

He ended up not asking for advice, just using me for execution. But he was so good at what he was doing, despite a low level of knowledge, that everybody at Bell started following him in the back office admin system. You would hear people talking over lunchtime and in the lift -- "What's Bali Boy doing?" (as we used to call him). People would track his trades, and he was very successful.

2005 was the resources boom era -- it ran from around 2002 to 2008. What he was doing was investing on thematics rather than stock picking. He parked most of that money in BHP and also bought Fortescue, which at the time was pretty much an explorer turning into a producer. He was terribly successful. He had other iron ore stocks too, and also bought into uranium. I think he had Paladin when it was still below 50 cents, and it went to $10. He was playing themes.

If you play themes, the stocks pick themselves. He had read one line about China building "a Brisbane every three months." So they were going to need a lot of iron ore and steel, and that was going to come from Australia. All the iron ore stocks had fundamentals changing for the better. That was the key driver -- fundamentals changing for the better. The catalyst was China building Brisbane every three months.

We kept seeing things happening in the iron ore stocks. The smaller ones were getting taken over. They were declaring special dividends. They were having share buybacks. They were reporting better than expected results. We thought, what does he know? Has he got inside information? Truth is, he knew nothing more than us -- but he did know there was a catalyst. China was driving the iron ore price, which was feeding into the fundamentals of every iron ore stock. And when companies are making money, they announce special dividends, they have better results, they take over other companies. That's what was happening in iron ore.

The lesson from dealing with him was simple: you need fundamentals changing for the better. That takes a catalyst. You have to find something changing in the world, and good things will happen to stocks in good sectors.

Another thing he was particularly good at was being in Bali, looking at Australia from a distance. We were too close. He was like the man in the moon, looking down and saying, "All that iron ore is going to come from Australia." We were looking at the fundamentals of BHP, the PEs and yields. He was looking conceptually, saying Australia was in the perfect spot to exploit China's economic revolution. Objectivity was his edge.

So: objectivity, playing themes, and making sure fundamentals are changing for the better.

Take that to today. One of the strongest themes in the world right now is AI. Companies are doing deals, taking each other over, announcing contracts, reporting better than expected results -- all driven by the investment in cloud infrastructure to facilitate AI, and the demand for computing power.

Objectively, Australians can look at the US and say: yep, that's happening. Objectively, we can also see it's all getting overvalued. Objectively, we can see that at some point it's sentiment-driven and that might change. But for now, that is the theme.

It's a great template for any investing: ask, what's the catalyst? Are the fundamentals changing for the better? If you get that right, the stocks pretty much pick themselves. And the events that surprise on the upside will just happen.

Good things happen to stocks in good sectors.

DISCLAIMER: This content is for general information purposes only and does not constitute personal financial advice. Please consider your own circumstances or seek professional advice before making investment decisions.

Funds operated by this manager:

Marcus Today Equity Income SMA , Marcus Today Growth SMA

Australia's real estate shake-up: Where opportunity lies

Airlie Funds Management

October 2025

(Viewing time: 11 mins)

Airlie's Senior Equities Analyst, Jack McNally discusses how rising construction costs are reshaping Australia's property market and revealing new opportunities in listed REITs.

Funds operated by this manager:

Airlie Australian Share Fund , Airlie Small Companies Fund

Important Information: 

This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 trading as Airlie Funds Management ('Airlie') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation.  This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement ('PDS') and Target Market Determination ('TMD') and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to an Airlie financial product or service may be obtained by calling +61 2 9235 4760 or by visiting www.airliefundsmanagement.com.au.

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any financial product or service, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of an Airlie financial product or service may differ materially from those reflected or contemplated in such forward-looking statements.

This material may include data, research and other information from third party sources. Airlie makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Airlie. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Airlie will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material.

Any third party trademarks contained herein are the property of their respective owners and Airlie claims no ownership in, nor any affiliation with, such trademarks.   Any third party trademarks that appear in this material are used for information purposes and only to identify the company names or brands of their respective owners. No affiliation, sponsorship or endorsement should be inferred from the use of these trademarks.  This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Airlie.