State Street recently launched an exchange traded fund (ETF) tracking infrastructure, the SPDR/FTSE Macquarie Global Infrastructure 100 (GII). Roger Nusbaum in TheStreet.com analyzed the fund and questions whether the ETF is an infrastructure or utility fund. Looking at the make up of the ETF, 90% of the holdings are utility companies, the top 10 holdings are all utilities and 38% of the ETF is U.S. companies. To be sure, the ETF also holds energy (5%), industrials (4%) and telecom (2%) companies as well. Although U.S. companies make up a large portion of the overall holdings, there are only two in the top 10.
Nusbaum goes on to compare the ETF to other utility ETFs, such as iShares S&P Global Utilities Sector (JXI) and WisdomTree International Utilities Sector (DBU) he states that the holdings are similar although the weighting is different. Given some time, this ETF may or may not prove that it is an infrastructure or utility fund. As with any investment it is prudent to look under the hood to see what you are getting and then determine if it fits in your portfolio.
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.