Making History with Infrastructure ETFs
April 19th, 2010 at 2:00pm by Tom Lydon
Infrastructure investment is perched on the edge of history, and we’re in the thick of it. Between 2009 and 2015, trillions will be spent around the world building up bridges, roads, water systems and much more. By investing in infrastructure exchange traded funds (ETFs), you can be positioned to benefit directly.
Governments around the world have pledged to spend trillions of dollars over the next few years on the biggest global build-out of physical economic assets in the history of man. Eric J. Gerritsen for The Journal of Commerce reports that this boom is already in place and it will transform the way the world appears.
- Some of the changes expected to occur include how the world looks, gets educated, moves goods and services, creates wealth, treats the sick, cares for the poor, powers its homes and businesses and wages war. [Building Blocks of Infrastructure ETFs.]
- The Obama administration will spend $150 billion of its $787 billion stimulus plan on infrastructure and is expected to add to that.
- Many other countries are also going to invest in this sector: China has pledged $585 billion and stands ready to do more; India is expected to spend $500 billion on infrastructure from now until 2015; the European Union, $252 billion; Japan, $129 billion; Canada, $12 billion; Australia, $4.7 billion, Singapore, $13.8 billion; Germany, $42 billion. [4 ETFs for India's Growing Economy.]
- CIBC World Markets estimates total infrastructure spending over the next 20 years at $35 trillion. Some $3 trillion of fiscal adrenalin will be injected into the global economy in the next 24 months alone. [Brazil's Infrastructure ETF.]
A growing number of infrastructure ETFs have launched in recent months, giving investors more flexibility in how they access this growth. PowerShares, iShares and Emerging Global Advisors all have funds aimed specifically at growth in emerging markets. State Street and iShares also have broader funds that target both developed and developing countries. Many of these ETFs have heavy weightings in utility companies, so if you’ve already got utilities exposure, check twice to be sure you’re not doubling up.
For more stories about infrastructure, visit our infrastructure category.
- SPDR FTSE/Macquarie Global Infra 100 (NYSEArca: GII): This ETF has the heaviest U.S. weighting in an infrastructure fund at close to 40%; also holds Germany, Japan, France, United Kingdom, Spain and more.
- PowerShares Emerging Markets Infrastructure (NYSEArca: PXR): Gives exposure to China, Brazil, South Africa, United States, Taiwan and more.
- iShares S&P Global Infrastructure Index (NYSEArca: IGF): Gives exposure to the United States, German, France, Australia, Canada, Italy and more.
- iShares S&P Emerging Markets Infrastructure (NASDAQ: EMIF): Contains exposure to China, Brazil, South Korea, Czech Republic, Mexico, Russia and Chile.
- Emerging Global Shares INDXX China (NYSEArca: CHXX): Contains exposure to real estate management and development, metals and mining, electrical equipment, power producers, telecom, transportation and more.
- Emerging Global Shares INDXX Brazil (NYSEArca: BRXX): Contains exposure to metals and mining, power producers, transportation infrastructure, electric utilities, telecom and more.
- UBS E-TRACS Alerian MLP Infrastructure ETN (NYSEArca: MLPI): This brand-new fund launched on March 31; the fund’s constituents earn at least 50% of their earnings from assets that aren’t directly exposed to commodity price changes. ETNs are debt instruments backed by the full faith and credit of the issuer. [Differences Between ETFs and ETNs.]
For more stories about the growth of the infrastructure sector, check out our infrastructure category.
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.