Market Overview
Global equity markets rose sharply in April, belying a volatile period in which the outlook for a negotiated end to the war in Iran remained uncertain and the “artificial-intelligence (AI) trade” resumed.
During the month, all eyes were on the Middle East, where efforts to end the war in Iran and re-open the Strait of Hormuz to commercial traffic proved elusive. Risk appetites waxed and waned as the crisis toggled between threats by the U.S. to escalate its military campaign against Iran and fragile ceasefires that nevertheless kept the Strait of Hormuz effectively closed amid stalled peace talks. Despite growing uncertainty about the path ahead to end the war, stock markets around the world surged during the pauses in the fighting on hopes that hostilities between the U.S. and Iran would ease enough to end the global disruption in oil supplies and avoid lasting damage to the world economy.
Major central banks continued to grapple with the economic fallout from the war in Iran, as they deliberated over their interest rate-policy paths. In the U.S., the Federal Reserve (Fed) held interest rates steady in April, marking the third consecutive policy meeting in which it had done so. The Fed continued to signal that its next action was more likely to be a rate cut than a rate hike, though it acknowledged that this “easing bias” language may change as early as June, as higher energy prices were expected to accelerate overall domestic inflation in the near term and an already uncertain U.S. economic outlook grew more cloudy. At the end of April, Fed-funds futures traders were pricing in a 0% chance that the Fed would cut interest rates this year, and a 55% chance of a rate hike by April 2027, which was up from about 20% before the U.S. central bank’s latest policy decision, according to the CME’s FedWatch tool. The yield on the benchmark 10-year U.S. Treasury note ended April at 4.38%, 6 basis points (bps) higher than a month earlier.
Across the Atlantic, the European Central Bank (ECB) left interest rates unchanged for a seventh consecutive policy meeting in April amid signs that the fallout from the Iran war was beginning to take a toll on the eurozone economy. The ECB’s policy decision came as the latest data indicated that inflation in the 21-country common currency block had risen sharply in April, largely due to surging energy costs and after hovering near the ECB’s 2% target for almost a year before the war started. At the end of the month, interest rate futures markets were betting that the ECB would deliver at least two 25-bp rate hikes this year, starting with its next policy meeting in June. Elsewhere in Europe, the Bank of England (BOE) also held interest rates steady in April but raised its forecast for domestic inflation, as the U.K. economy absorbed a “significant energy price shock” stemming from the war in Iran. The British central bank warned that it was “ready to act as necessary” to contain accelerating price growth. The yield on the 10-year German Bund, Europe’s principal safe-haven asset, ended April at 3.04%, 4 bps higher than a month earlier.
Meanwhile, in Japan, which imports 95% of its crude oil from the Middle East, the Bank of Japan (BOJ) held interest rates steady at its policy meeting in April despite raising its forecast for inflation due to climbing energy prices. However, hawkish comments delivered afterward by the BOJ governor raised expectations that the Japanese central bank would deliver a rate hike at its June policy meeting. Elsewhere in Asia, China’s central bank instructed the country’s lenders to expand credit amid expectations that the country’s economy will slow over the rest of the year due to concerns that the war in Iran could potentially hurt corporate profits and dampen overseas demand for Chinese goods.
Evolving sentiment about AI continued to play an outsized role in driving stock-market behavior. Despite lingering worries that the lavish spending by technology companies to build-out AI infrastructure may not lead to as much profit as hoped, strong earnings results by some of the biggest spenders on and beneficiaries of AI allayed some of these concerns and reignited the “AI trade,” as investors bet that the construction of data centres would continue. The month also saw the stocks of software makers rebound after a recent market sell-off, as nascent fears that the industry could be vulnerable to being displaced by the growing capabilities of AI receded and gave way to signs that investors were learning to differentiate between the potential winners and losers in the AI era. Notably, the top 10 contributors to the MSCI All Country World Index’s overall gain in April were all technology stocks, with most leveraged to AI. These technology stocks accounted for 44.8% of the index’s total return.
The start of the new earnings season painted a mixed picture of how interest-rate headwinds have impacted company profits, according to data from FactSet. In the U.S., 84.0% of the companies in the S&P 500 Index that reported results topped consensus estimates, outperforming the long-term average of 67.4%. The first-quarter earnings growth rate is estimated to have increased 27.1% from a year earlier. In Europe, 52.3% of the companies in the STOXX 600 Index that reported results posted better-than-expected earnings, below the 54.0% that do so in a typical quarter. The year-over-year first-quarter earnings growth rate is expected to have contracted 7.9%. In Japan, 66.7% of the companies in the TOPIX that reported results exceeded consensus estimates, surpassing the 57.8% beat rate over the past four quarters. The earnings growth rate for the January-March period is estimated to have increased 8.5% from a year earlier. In Hong Kong, 38.9% of the companies in the Hang Seng Index that reported results registered better-than-expected earnings, lagging the 53.8% beat rate over the past four quarters. The first-quarter earnings growth rate decreased 11.6% from a year earlier.
Against this backdrop, equity markets in both the developed and developing worlds rose sharply in April, with the latter outperforming the former. In the U.S., the S&P 500 surged to an all-time high, thanks to strong earnings results and optimism about the health of the U.S. economy. In Europe, the STOXX 600 rose but underperformed, on expectations that the ECB and BOE deliver hike rates in the near term in order to quell raising inflation stemming from the Iran war-induced surge in energy prices. In Japan, the TOPIX rose but underperformed, as investors feared that an anticipated rise in global inflation will curb worldwide demand for Japanese goods and hurt the country’s export-reliant economy. In emerging Asia, the stock markets in global technology hubs Korea and Taiwan both jumped after a handful of index heavyweight chipmakers from both countries reported stellar earnings results, which fueled optimism about AI.
Information technology was the best-performing sector in April, as strong earnings from companies leveraged to AI boosted their stock prices. Energy was the worst-performing, as shares of oil producers fell on profit-taking after strong stock price appreciation.
Outlook
Our outlook at the beginning of 2026 anticipated elevated uncertainty, and this view was reaffirmed in early March with the outbreak of war in Iran. The conflict has already had a profound effect on oil and other commodity prices, interest rates, and a wide range of financial assets. The situation remains highly fluid, with intermittent diplomatic efforts underway, and the economic and market implications will depend heavily on both the duration of the conflict and its ultimate resolution.
While the degree of uncertainty is greater than we initially anticipated, we believe patience is essential as events continue to unfold. Accordingly, we did not make major portfolio positioning changes during March in direct response to the conflict.
The most immediate financial market impacts have been the surge in fuel and other commodity prices, along with an increased risk of shortages in key inputs for agricultural and manufacturing activity. In our view, these developments will likely translate into higher input cost inflation in the near term. However, the magnitude and persistence of these effects will depend significantly on how long the conflict endures and the extent to which trade through the Strait of Hormuz remains constrained.
At the same time, a sustained increase in energy and commodity prices would likely exert a contractionary influence on global economic activity. On balance, we believe the risks to global economic growth over the next one to two years may outweigh the risk of sustained inflationary pressure, supporting a more defensive investment posture.
Unsurprisingly, the Midstream Energy sector has been a significant contributor to portfolio performance since the outbreak of the conflict and remains among the strongest sector contributors year to date. Recent developments have reinforced the importance of energy security and the critical infrastructure required to supply global energy demand. Unlike upstream and downstream energy businesses that may experience greater sensitivity to commodity prices and refining margins, midstream companies benefit primarily from fixed-fee, high-visibility revenue streams tied to essential infrastructure assets. As governments and markets increasingly prioritize energy security and supply reliability, we expect these characteristics to remain supportive for the sector.
Defensive utilities have been the largest contributor to year-to-date performance in both absolute and relative terms versus the benchmark. It is perhaps unsurprising that one of the most defensive sectors within our infrastructure universe has outperformed amid heightened uncertainty. We continue to view utilities as a core allocation while volatility persists. At the same time, the sector is benefiting from powerful secular trends, including electrification and rising electricity demand associated with technological innovation, data centre development, and electrified transportation. We expect these structural drivers to support sustained investment in power infrastructure and provide resilience even in the face of conflict-driven economic weakness.
Communication services have also provided stability, with largely resilient—and in some cases exceptional—year-to-date total returns among our holdings. In our view, the sector should retain its defensive appeal given generally undemanding valuations, ongoing industry consolidation, and continued exponential growth in global data creation and transmission needs. This dynamic also extends to telecommunication tower REITs, which have recently exhibited greater sensitivity to higher interest rates than we believe is fundamentally warranted. Should slower economic growth eventually lead to lower long-term interest rates, this dynamic could become a meaningful tailwind for the sector.
Transportation infrastructure remains the area most exposed, in our view, both to the direct impact of higher fuel costs and to potential slowing in global economic activity affecting trade flows, port volumes, and rail and ground transportation demand. That said, our experience has often shown that abrupt disruptions affecting critical transportation infrastructure can create attractive investment opportunities. Energy price shocks and cyclical slowdowns tend to be temporary, whereas the value of these assets is ultimately driven by long-life cash flows and supported over time by energy price normalisation, lower interest rates, and economic recovery.
In sum, while the outbreak of war introduces new risks and uncertainties into an already complex investment landscape, it also reinforces the defensive characteristics that make infrastructure securities an important component of diversified investment portfolios.
The current environment also underscores several of the key secular investment themes that the Caldwell-Lazard CorePlus Infrastructure Fund is designed to emphasize, including energy transition (encompassing both renewable development and energy security) and the strengthening of global supply chain resilience and efficiency.
We believe the portfolio remains well positioned to capitalize on these opportunities across real asset infrastructure businesses as well as key enabling industries—including materials, services, and technologies—that both support and benefit from continued investment in critical infrastructure.
The information contained herein provides general information about the Fund at a point in time. Investors are strongly encouraged to consult with a financial advisor and review the Simplified Prospectus and Fund Facts documents carefully prior to making investment decisions about the Fund. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated.
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Allocations and security selection are subject to change. The performance quoted represents past performance. Past performance is not a reliable indicator of future results. Mention of these securities should not be considered a recommendation or solicitation to purchase or sell the securities. It should not be assumed that any investment in these securities was, or will prove to be, profitable, or that the investment decisions we make in the future will be profitable or equal to the investment performance of securities referenced herein. There is no assurance that any securities referenced herein are currently held in the portfolio or that securities sold have not been repurchased. The securities mentioned may not represent the entire portfolio.
Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Securities in certain non-domestic countries may be less liquid, more volatile, and less subject to governmental supervision than in one’s home market. The values of these securities may be affected by changes in currency rates, application of a country’s specific tax laws, changes in government administration, and economic and monetary policy. Emerging markets securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities markets of emerging markets countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in these countries.
Securities and instruments of infrastructure companies are more susceptible to adverse economic or regulatory occurrences affecting their industries. Infrastructure companies may be subject to a variety of factors that may adversely affect their business or operations, including additional costs, competition, regulatory implications, and certain other factors.
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Published on May 21, 2026.