Market Overview
Global equity markets retreated in March, as escalating tensions in the Middle East curbed risk appetites.
The month was another turbulent one for stock markets around the world, marked by growing anxiety about the economic fallout from the U.S.’s and Israel’s military campaign against Iran. News that Iran had imposed a near-total blockade of the Strait of Hormuz in response to airstrikes rattled investors, who feared that its effective closure would have dire consequences for the global economy given that one-fifth of the world’s oil and natural gas and roughly one-third of the world’s fertiliser that sustains global crops pass through the narrow waterway. With oil prices soaring as a result of what the International Energy Agency called the biggest oil-supply disruption in history, and amid expectations that food prices would soon climb due to the rising cost of fertiliser, concerns were growing that Iran’s actions would lead to a surge in inflation around the world. Worries about the inflationary impact of surging oil prices led to a sell-off in government bond markets, with the resultant rise in yields cranking up the pressure on global stocks by undercutting their appeal. Global stock and oil markets were volatile throughout March, as investors searched for any signs that a de-escalation of hostilities was on the horizon. The price of Brent crude oil, the global benchmark, ended March at US$118.45 per barrel, a 63% increase since the war in Iran began on February 28, and the largest monthly jump in percentage terms on record.
The month saw a slew of policy actions from major central banks in which the war in Iran was a major factor in deliberations. All eyes were on the U.S., where the Federal Reserve (Fed), as expected, held interest rates steady, marking the second consecutive policy meeting in which it has done so. After earlier minimising the possibility that it would raise interest rates, the Fed backtracked and signalled that all policy actions were on the table, including a rate hike, citing persistent inflationary pressure that will likely worsen as energy prices rise due to the Iran war. The Fed left the door open for one rate cut by the end of 2026 but emphasized that it was now severely constrained in its ability to ease its monetary policy. In the wake of the U.S. central bank’s latest policy decision, Fed-funds futures traders were betting on a 73% probability that the Fed would hold rates steady this year or perhaps raise them, according to the CME’s FedWatch tool. Notably, just a month earlier, these same traders were pricing in a 74% chance that the Fed would lower rates at least twice this year. The yield on the benchmark 10-year U.S. Treasury note ended March at 4.32%, 37 basis points (bps) higher than a month earlier.
Across the Atlantic, the European Central Bank (ECB) left interest rates unchanged for the sixth consecutive policy meeting in March and warned of “the upside risks for inflation and downside risks for economic growth” due to the war in the Middle East. The ECB’s decision to revise its inflation outlook upward raised expectations that the eurozone central bank will deliver one to two rate hikes this year. In the U.K., the Bank of England (BOE) also left interest rates unchanged but warned that with inflationary pressure beginning to exert itself due to rising energy costs stemming from the war in Iran, its next policy action was more likely to be a rate hike than a cut. Elsewhere in Europe, central banks in Switzerland, Sweden, and Norway all held interest rates steady, citing an uncertain economic outlook due to the conflict in the Middle East. The yield on the 10-year German Bund, Europe’s principal safe-haven asset, ended March at 3.00%, 34 bps higher than a month earlier.
Meanwhile, in Japan, the Bank of Japan held interest rates steady at it’s policy meeting in March but warned that a rate hike was coming soon on expectations that the war in Iran will exert upward pressure on domestic inflation. Elsewhere in Asia, the People’s Bank of China affirmed its commitment to an accommodative monetary policy.
The conclusion of the latest earnings season provided investors with an update on how company profits have held up amid shifting market dynamics. In the U.S., 75% of the companies in the S&P 500 Index topped consensus estimates, which was above the long-term average of 67%. The fourth-quarter earnings growth rate increased 13.9% from a year earlier. In Europe, 46% of the companies in the STOXX 600 Index posted better-than-expected earnings, below the 54% that do so in a typical quarter. The year-over-year fourth-quarter earnings growth rate expanded 4.2%. In Japan, 61% of the companies in the TOPIX posted positive earnings surprises, surpassing the 54% beat rate over the past four quarters. The fourth-quarter earnings growth rate increased 0.6% from a year earlier. In Hong Kong, 42% of the companies in the Hang Seng Index registered better-than-expected earnings, lagging the 58% beat rate over the past four quarters. The fourth-quarter earnings growth rate decreased 15.6% from a year earlier.
Against this backdrop, equity markets in the developed and developing worlds both fell in March, with the former outperforming the latter. In the U.S., the S&P 500 fell but outperformed, as the country’s status as an oil exporter helped to mitigate some of the Middle East energy risk. In Europe, the STOXX 600 lagged the broader global index, as expectations of rate hikes from the ECB and BOE dampened risk sentiment. In Japan, which imports 95% of its oil from the Middle East, the TOPIX underperformed on expectations that surging oil prices will stoke higher inflation, which would force the BOJ to raise interest rates in the near term. Meanwhile, in emerging markets, the MSCI EM Asia ex China Index underperformed, as soaring oil prices clouded the economic outlook of the emerging Asia excluding China region, triggering the largest monthly foreign capital outflows on record going back to 2009, according to data from Bloomberg. Iran’s declaration that it will allow ships from “nonhostile” countries to pass through the Strait of Hormuz benefited China and limited the domestic economic fallout from Iran’s de facto blockade of the waterway. 25% of the oil China imports passes through the strait.
Energy was the best-performing sector in March, as shares oil producers rose in sympathy with the soaring price of crude oil due to Iran’s effective closure of the Strait of Hormuz. Materials was the worst performing sector, as shares of gold miners fell in sympathy with the sharp decline in the price of gold as the result of rising U.S. Treasury bond yields, which undercuts the appeal of the precious metal.
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.
Against this backdrop, the Caldwell-Lazard CorePlus Infrastructure Fund has demonstrated notable resilience year to date. For the first three months of 2026, the fund generated a total return of +12.4% (CAD, net of fees), significantly outperforming broad global equities as measured by the MSCI ACWI Index (-1.45%), and also ahead of its benchmark, the MSCI ACWI Infrastructure Net Index (+11.0%).
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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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.
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Published on April 15, 2026.