Infrastructure ETFs: The Consequences of Not Spending
February 1st 2010 at 2:00pm by Tom Lydon
Infrastructure is a sector that has lacked substantial investment and any further negligence of this area may put economic growth at risk, experts believe. The renewed sense of urgency could benefit infrastructure exchange traded funds (ETFs).
Governments around the world need to increase their spending on agriculture, energy, water, transport and information technology infrastructure. But where will the money come from? [What is holding back infrastructure spending?] In the United States, stimulus money is still being deployed. [Will 2010 be the year for an infrastructure boost?]
Lloyd’s reports that underinvestment in infrastructure is one the most highly interconnected risks, among others such as:
- Telecommunications systems are heavily relied on by many industries, most importantly emergency services.
- Power grids are vulnerable; failures have impacted more than 50 million people in North America since 2003.
- A lack of infrastructure spending means that disease spreads more rapidly.
- Major port closures could occur, which would choke off world trade and have widespread consequences at a time when we need world trade most.
Shawn Langlois and William Spain for MarketWatch report that Caterpillar (NYSE: CAT) wrapped up what it said was the worst economic year it had faced in generations. This year could be better - the heavy-machinery giant is signaling a cautious outlook for 2010, after a steep drop in fourth-quarter profit.
For more stories about infrastructure, visit our infrastructure category.
- iShares S&P Global Infrastructure Fund (NYSEArca: IGF)
- SPDR FTSE/Macquarie Global Infrastructure 100 (NYSEArca:GII)
- PowerShares Emerging Markets Infrastrucutre (NYSEArca: PXR)
- iShares S&P Emerging Markets Infrastructure (NYSEArca: EMIF)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.