An Infrastructure ETF Reaches a Critical Point

The iShares Global Infrastructure ETF (NYSEArca: IGF) slumped more than 2% last week, sending the popular infrastructure exchange traded fund to critical technical support. IGF is still up 15.3% year-to-date, a decent performance, but one that lags the S&P 500.

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.

“However, after a few months of choppy, sideways price action, IGF last week broke lower. The stock on Thursday gapped below its 126-day moving average (a trendline that roughly corresponds with half a year’s worth of trading days), which had previously cushioned the fund’s drawdowns in late October and late November. Additionally, IGF gave up the $45 level in the process, after this area previously marked a floor through the bulk of the second half of 2017,” according to Schaeffer’s Investment Research.

The American Society of Civil Engineers calculated that the U.S. will fall $1.44 trillion short of the $3.32 trillion required to invest in infrastructure through 2025.