ETF Trends » MFD

6 Global Opportunities for Infrastructure ETFs

Tom Lydon — Wed, 31 Dec 2008 23:00:01 +0000

How can infrastructure lead the U.S. economy toward a recovery, when the global malaise upon is and emerging markets, investments and exchange traded funds(ETFs) are down in the dumps?

Carl Delfeld for ETF XRAY says that infrastructure as an investment theme presents two trends: urbanization and infrastructure gap in emerging markets and nations. As the world has grown and certain cities have urbanized or industrialized, the stronger economic growth and international trade has led the way for more need for infrastructure.

Areas that need building up in certain industrializing nations are seaports, airports, roads, railways and pipelines. Here, in the United States, infrastructure is aging and in need of repair and upgrades for efficiency and safety. An investment in this sector will lead to more job creation and more capital flow, helping to pull the United States, and perhaps even the rest of the globe, out of a recession.

Points that Delfeld has regarding global infrastructure:

5% of Brazil’s roads are paved
Canada is launching a $33 billion infrastructure plan
China is building 97 regional airports by 2020; they spend 10% of GDP on infrastructure a year
Container terminals have seen 42% growth in three years
South Africa’s mobile phone companies are growing 4% a year
Mexico City’s population will soon surpass 20 million

ETFs to consider:

iShares S&P Global Infrastructure Index (IGF): down 43% year-to-date

First Trust/ Macquaerie Global Infrastructure Utility and Dividend Index (MFD): down 57% year-to-date

What Roadblocks Infrastructure ETFs Need to Clear

Tom Lydon — Fri, 05 Dec 2008 22:00:35 +0000

President-elect Barack Obama has called for spending billions on infrastructure projects, with hopes of building up some life into the markets and exchange traded funds (ETFs).

The idea is wonderful, however, the execution will be another overhaul altogether, as traditional funding for these types of projects just isn’t there. The usual approach for business will not work in this environment, and the fuel tax that is usually reserved for this type of overhaul does not exist via the government, reports Sam Eaton for MarketPlace.

Patrick Jones says that pricing structure would come from private funding through toll roads. It could reduce wear on roads by encouraging people to drive less, while also prompting more use of public transportation.

Governors met with Obama to secure plans for infrastructure projects this week. The governors are seeking $138 billion for infrastructure projects that are already planned and awaiting funding, reports NewsTimes.com.

Obama stated that things in the economy are going to get worse before they begin to get better, and it will take time to get out of this recession. With 533,000 job losses and more on the way, we must see the crisis as an “opportunity to transform our economy” and investments in infrastructure and alternative energy technology could be the answer, reports Matthew Benjamin and Julianna Goldman for Bloomberg.

Infrastructure upgrades will help create thousands of new jobs that cannot be outsourced. These jobs can help displace the unemployment rates and get the economy humming again. The investment in infrastructure is also important because it will benefit public safety and ensure that future generations reap the rewards, as well. Plus, it will enhance the look and presentation of certain areas.

iShares S&P Global Infrastructure Index (IGF): down 47.2% year-to-date

First Trust Macquarie Global Infrastructure Utility and Dividend (MFD): down 62.3% year-to-date

Africa’s Tough Decisions About Food or Water Help Certain ETFs

Tom Lydon — Mon, 21 Jul 2008 22:00:30 +0000

In Africa, the population is struggling with a life-or-life dilemma that could help infrastructure, agriculture and water-related exchange traded funds (ETFs).

For years, the countries in North Africa have drained aquifers, sucked the salt from seawater and diverted the Nile River in order to make deserts bloom, says Andrew Martin for the New York Times. The projects to do so were so expensive that importing food was more practical, and today, some countries import at least 90% of their staples.

The global food crisis today is making that a whole lot less practical, and those countries are rethinking the old ways they’ve done things.

The population of this region has more than quadrupled since 1950, to 364 million, and is expected to reach 600 million by 2050. That’s going to cut heavily into an already-scarce water supply.

Since the world markets can no longer be as relied-upon, the countries are developing new and expensive schemes to maintain the food supply. One country is growing rice in solar-powered greenhouses, fed by groundwater and cooled with seawater. The project has been called by a World Bank economist as “probably the most expensive rice on earth.”

This New York Times image shows that the fastest-growing places on earth are also among the world’s driest areas, further putting a crimp on supplies.

(Click for a larger version)

As these countries work to find cost-effective solutions to the problem of rising costs and dwindling resources, some ETFs might see their numbers shift, including:

iShares S&P Global Infrastructure (IGF), down 15.2% year-to-date
Macquerie/First Trust Global Infrastructure/Utilities Dividend Income Fund (MFD), down 19.4% year-to-date
PowerShares Water Resources (PHO), down 4% year-to-date
Claymore S&P Global Water (CGW), down 11.2% year-to-date
MLCX Grains Index (GRU), down 4.4% year-to-date
PowerShares DB Agriculture (DBA), up 12.4% year-to-date