While he was campaigning, President Donald Trump’s pledge to spend $1 trillion shoring up U.S. infrastructure needs was seen as a potential catalyst for the related exchange traded funds. Still, it could take some time for infrastructure ETFs to see the full benefit of Trump’s still nascent infrastructure plans.
Outside the U.S., countries are already allocating money toward infrastructure projects. For instance, Japan has invested $100 billion for roads, bridges, railways and other building projects in Asia. China has already stated it will put billions into a so-called Silk Road infrastructure project to connect Asian economies.
ETF investors can also tap into the sector through a number of options. For instance, the iShares Global Infrastructure ETF (NYSEArca: IGF) and SPDR S&P Global Infrastructure ETF (NYSEArca: GII) track the S&P Global Infrastructure Index.
“Investors poured a net $320 million in November and December into BlackRock Inc.’s iShares Global Infrastructure ETF, the largest exchange-traded fund in the category. It tracks the S&P Global Infrastructure Index and has climbed about 19 percent in the past 12 months yet investors pulled almost $100 million in January, according to Morningstar estimates,” reports Bloomberg.
The American Society of Civil Engineers calculated that the U.S. will fall $1.44 trillion short of the $3.32 trillion required to inves tin infrastructure through 2025.
According to Trump’s book, “Crippled America: How to Make America Great Again,” he has called for a “trillion-dollar rebuilding program” that will be “one of the biggest projects this country has ever undertaken.”
Investors looking for a yield play on infrastructure can consider the Guggenheim High Income Infrastructure ETF (NYSEArca: GHII), which is composed of the 50 highest-dividend-paying global infrastructure companies.
GHII’s assets under management “jumped more than 350 percent since Trump’s election to almost $29 million as of Feb. 13 as more investors noticed its performance, according to William Belden, head of Guggenheim’s ETFs development,” notes the Bloomberg article.
ETF investors who are wary of additional currency risks can also take a look at the recently launched Deutsche X-trackers S&P Hedged Global Infrastructure ETF (NYSEArca: DBIF), which includes similar exposure to IGF and GII, except DBIF tries to mitigate the negative effects of falling foreign currencies.
DBIF is higher by 21.1% over the past year.
For more information on the infrastructure sector, visit our infrastructure category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.