Lazard's Bertrand Cliquet is looking beyond the megatrends
The Auxance viaduct on the South Europe Atlantic high-speed rail line between Tours and Bordeaux, built by France's Vinci. Infrastructure is more than AI, says Lazard portfolio manager Bertrand Cliquet.
Getting investors to look past dazzle of artificial intelligence and data centers toward ordinary roads, bridges and cell towers is a fairly tall order these days.
That's the strategy at the $12.3 billion Lazard Global Listed Infrastructure Portfolio fund GLIFX, the Irish-domiciled Lazard Global Listed Infrastructure Equity Fund and the newer Lazard Listed Infrastructure ETF GLIX, seeking out opportunities in energy, water, transport and communications.
The funds focus on lower-risk infrastructure businesses, which act as a tidy diversifier between bonds and equities, portfolio manager Bertrand Cliquet told MarketWatch in an interview on Monday.
Infrastructure investments have an important GDP multiplier effect that can foster significant economic growth by keeping basic services available and flowing, Cliquet said. "If you don't grow your infrastructure and your people spend their lives stuck in traffic, you know it's a massive GDP loss."
Cliquet said they look for companies subject to regulatory agreements or concession contracts that offer long-term cash-flow businesses, which helps drive long-term predictable patterns of returns and capital preservation for investors.
"Historically it was a sector that was very pedestrian from an organic-growth standpoint, and what we've seen is a real transformation in terms of the ability of companies to build stuff," said the manager.
He said investors need to look beyond megatrends of artificial intelligence and data centers when looking at these stocks, one reason why the fund is 26% exposed to the U.S., but more than 50% weighted to Europe and the U.K. via names such as Ferrovial (NL:FER) and Vinci (FR:DG).
"If you listen to earnings calls from most U.S. regulated utilities, they'll mostly be about AI and data centers. In Europe, we find a very compelling range of long-term drivers," he said.
For example, the importance of energy transition has increased since the start of the Ukraine war, while recurrent European droughts are driving companies to "invest very heavily" in water resources and desalination plants. Cliquet said such drivers for companies can stretch beyond five years, while data-center investment is more "icing on the cake."
The U.S. is still an important market for them. A top holding is U.K. electricity and gas utility, National Grid (UK:NG) $(NGG)$, which has 45% of its operations in the U.S.
"It is the key company doing all the transformation of the U.K. power grid to link up all the renewables coming from the North Sea," he said. In the U.S., through assets in Long Island, upstate New York and Massachusetts, National Grid has "done a remarkable job in being one of the most efficient companies in the sector."
He also flagged Illinois-based Exelon $(EXC)$, focused on energy transmission and distribution. It offers "some of the most reliable networks across the U.S. and providing their service at some of the cheapest rates across the states."
"It's a well-run business and then what we like is that they have taken an extremely cautious and customer-focused stance on data-center developments," he said.
Bertrand Cliquet, portfolio manager for Lazard Global Listed Infrastructure Equity Fund
While many such companies tout exciting growth prospects around data centers, Exelon has been "weeding out speculative data-center projects" by demanding so-called transmission security agreements, he said. Those require millions and sometimes billions of dollars in collateral for companies wanting to use power to hook up data centers, meaning they "bear their fair share of costs to the system."
American Tower REIT $(AMT)$ and Crown Castle $(CCI)$, long-term contracted telecom tower businesses, also get a mention. He said they used to be market darlings with higher multiples a few years ago that have been driven down by higher interest rates.
"We still see that they have solid prospects and are a good complement to satellite technology, so we don't think it's one or the other," he said.
"They are a very efficient way to provide things such as 5G mobile data to customers across the states at a very efficient price," he said.
His final pick is Consolidated Edison $(ED)$, the monopoly providing power to Manhattan Island. "As you can imagine, they are less underpinned by data-center growth, and there are not so many huge data centers that you can install on the island of Manhattan," said Cliquet.
It's a company "well-underpinned" by solid regulation in New York, which continues to invest in resilience in the power grid, he said.
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are rising as oil futures (CL.1) (BRN00) shed early gains on hopes of a U.S.-Iran peace deal. Gold (GC00) is climbing.
Key asset performance Last 5d 1m YTD 1y S&P 500 7753.11 2.01% 3.16% 13.26% 21.65% Nasdaq Composite 26,605.36 2.67% 2.83% 14.47% 24.41% 10-year Treasury 4.735 11.60 14.30 56.30 44.10 Gold 4432.1 7.21% 9.21% 2.31% 30.37% Oil 84.14 11.98% 5.40% 46.56% 33.39% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
Nvidia (NVDA) said it will partner with six big financial firms, including BlackRock $(BLK)$ and Goldman Sachs $(GS)$, on a $500 billion deal to fund its AI buildout.
Intel $(INTC)$ bumped the size of its offering of new shares by $5 billion to $20 billion.
Rocket Lab stock (RKLB) is falling as mixed results overshadow "record backlog" and expansion plans.
CoreWeave (CRWV) and Super Micro Computer $(SMCI)$ will report after the close.
The NFIB small business optimism index rose to its highest level since August 2025. Existing-home sales are due at 10 a.m.
Trump said to have secretly used military jet to leave Turkey amid threats.
The chart
Deutsche Bank has taken a fresh look at the latest AI effects on the U.S. labor market, and offers this chart that shows how firms have been using the technology in the last six months - largely to "supplement or enhance" their employees.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker Security name NVDA Nvidia SPCX SpaceX TSLA Tesla PLUG Plug Power MU Micron TSM Taiwan Semiconductor Manufacturing PLTR Palantir AMD Advanced Micro Devices RKLB Rocket Lab MSFT Microsoft
NASA to broadcast eclipse from abandoned Spanish town.
-Barbara Kollmeyer
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