As economies around the world begin to mend and spend money on improvement projects, global infrastructure could gain momentum. An exchange traded fund such as the iShares S&P Global Infrastructure Index ETF (NYSEArca: IGF) gives exposure and diversification around the globe.
In developed countries around the world, the older infrastructure is continually becoming rundown, requiring repair and replacement. This depreciation will lead to billions of dollars being spent on upgrading and maintaining this infrastructure. [ETF Chart of the Day: Global Funds]
IGF has an expense ratio of 0.48%, and gives investors a yield of 4.1%. The fund actually outperformed the broad market last year. A fund such as IGF allows investors to access a specialized segment of the market while mitigating the risk of single companies. Plus, it takes the guesswork of stock picking out of the process.
There are plenty of infrastructure-focused companies that had decent performances over the past year. Duke Energy in particular gained 23% after the merger with Progress Energy, and the companies’ growing investment in renewable energy. Spectra Energy also gained about 15%, with a revenue growth rate that is on a steady uptrend, reports Selena Maranjian for The Motley Fool. [Infrastructure ETFs: The U.S. Isn’t Where Its At]
The bottom line is that no economy in the world can finance an infrastructure upgrade on public sector finance alone. Corporations will play a large role in the spending. In turn, the appeal of earnings that are diversified from the stock market and shorter term market trends could appeal to investors.
Other global infrastructure ETFs:
- SPDR FTSE/Macquarie Global Infrastructure (NYSEArca: GII)
- PowerShares Global Emerging Markets Infrastructure Portfolio (NYSEArca: PXR)
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.