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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"The strategy returned -12.40% net of fees in the third quarter of 2026 as rising Treasury yields pressured rate-sensitive infrastructure assets, but strong underlying fundamentals and broadening power demand from AI and electrification continue to support the strategy's long-term earnings compounding thesis."
Reaves Asset Management seeks high risk-adjusted total returns by investing in financially sound, dividend-growing infrastructure and utility companies with durable competitive moats and below-market valuations. During the third quarter of 2026, the strategy faced a challenging macroeconomic backdrop as rising Treasury yields, stubborn inflation expectations, and tighter monetary policy pressured rate-sensitive equity holdings, resulting in a quarterly return of -12.40% net of fees. Despite this near-term performance drag, fundamental operational results among portfolio holdings strengthened, evidenced by upward guidance revisions and a 6.5% year-over-year increase in weighted average cash distributions. The manager emphasizes that the physical buildout required to power, connect, and cool artificial intelligence data centers represents a multi-year secular tailwind for utilities, independent power producers, optical suppliers, and natural gas infrastructure. Portfolio positioning remains focused on companies with strong balance sheets capable of compounding earnings through the electrification buildout, with key contributors including optical component suppliers and contracted nuclear power generators. Moving forward, the manager maintains high conviction that broadening AI infrastructure demands and reindustrialization will drive sustained long-term earnings growth across the strategy.
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