Company: GLU-PB
Filing Date: 2025-09-04
Form Type: N-CSRS
Source: 0001829126-25-007144
Chunk: 2

Company: GABELLI GLOBAL UTILITY & INCOME TRUST
Filing Date: 2025-09-04
Form: N-CSRS
Chunk 2
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In the first half of 2025, the MSCI World Utilities Index rose 14.25%, thereby outperforming the broader market (MSCI World: +8.59%), with European utilities delivering the strongest gains in the first half of 2025 (MSCI Europe Utilities: +17.81%) after rebounding from 2024 losses. The S&P 500 Utilities Index rose 9.4% versus the S&P 500’s 6.2% gain, with the modest utility outperformance due to rising electricity demand driving increased investor interest in both regulated utilities and merchant generators. While generally insulated from tariffs, utility stocks saw some volatility amid shifting inflation expectations and uncertainty around clean energy tax credits.

Defensive, rate-based utilities outperformed in Q1 during market stress, but risk appetite returned in Q2 as economic data held firm and tariff concerns eased. Our coverage of 61 U.S. regulated utilities delivered a solid 9% median total return, while the four publicly traded merchant power producers (CEG, VST, NRG, TLN) surged 54% on average. In contrast, the three large California utilities (PCG, EIX, SRE) fell 25% on average due to renewed concerns over wildfire liabilities after January’s destructive fires.

In the U.S., the utility investment case is strengthening as electricity demand grows at its fastest pace since the mid-20th century, driven by AI-powered data centers, reshoring of manufacturing, and electrification of transport. Utilities are responding with record capital investment in generation and grid upgrades, often in partnership with hyperscalers like Amazon, Microsoft, and Google. Policymakers remain broadly supportive, creating a favorable backdrop for sustained rate base and earnings growth. Importantly, rising demand allows infrastructure costs to be spread over more kilowatt-hours, helping manage bill impacts. Still, execution risk remains as utilities must finance, build, and manage large-scale infrastructure efficiently. Federal policy momentum also supports the sector, with efforts to streamline nuclear permitting, expand gas-fired capacity, extend coal plant lives, and reduce regulatory bottlenecks.

In Europe, the focus remains on the long-term clean energy transformation, the need for adding scalable renewables and resilient grids to meet Europe’s decarbonization targets. After losing access to cheap Russian pipeline gas, Europe remains sensitive to expensive LNG imports as natural gas still accounts for 20%-25% of Europe’s power generation fuel mix. While gas and electricity prices have declined in 2023–24,