GCP Infrastructure – Don’t look back in anger

2023 was a challenging year for GCP Infrastructure Investments Limited (GCP) as rising interest rates and several other factors appeared to weigh on returns. Despite this, the company was still able to generate positive NAV returns which the advisers note was thanks mostly to inflation linkages and contracted earnings that helped offset the impact of rising discount rates. Unfortunately, negative sentiment continued to weigh on the company’s shares, with the discount widening to a record low, despite what the advisers believe remains a stable portfolio. Promisingly, it appears that inflation has begun to moderate, with the headline rate falling from 11.1% to 4.0% in the UK over the past year. The advisers believe that this should have a positive impact on sentiment which they say should help improve the fortunes of the trust going forward, particularly given the stability of GCP’s cash flows and its dividend yield of 10%.