Many advisors are reassessing equity strategies and portfolio allocations amid the recent market mayhem and recognizing that diversification is more important than ever. A well-diversified portfolio can capture multiple sources of returns while hedging risk from individual markets or sectors.
Given that much of the recent volatility stems from U.S. policy risk, one approach is to diversify portfolios with more international exposure. But rather than taking a broad-based global approach, targeting specific international sectors may be more attractive in the long run.
Global infrastructure ETFs can address multiple portfolio challenges within a single ticker. To start, taking a global portfolio perspective in general can help advisors reduce correlation to the U.S. market, which is facing significant uncertainty, fueled by turbulent tariff negotiations, inflation worries, and rapidly shifting policy.
Compared to global equities, global infrastructure can provide even stronger diversification potential for investors. This is due to how global infrastructure companies can tap into structural dynamics, some of which have low correlation with U.S. developments — for example, demographic changes. Meanwhile, favorable government policies are also structural tailwinds. For instance, Germany has recently taken steps to pump billions of dollars into infrastructure funding.
Additionally, inflation concerns are creating an even stronger argument for infrastructure. The sector has performed well historically during bouts of inflation. Services provided by infrastructure companies tend to be essential and inelastic, helping the companies pass costs onto consumers and thrive even during periods of inflation.
The chart below showcases how the S&P Global Infrastructure Index has performed over the last five years, compared to the U.S. Consumer Price Index. As the chart illustrates, the global infrastructure index has seen noticeably consistent results compared to the CPI, while steadily growing over the same time period.
Investment Case for BKGI
Advisors looking to build up their exposure to global infrastructure may want to look at the BNY Global Infrastructure Income ETF (BKGI). This fund looks to offer both yield and long-term returns through investment in global infrastructure assets.
To help build out its portfolio, BKGI’s management team applies a blend of fundamental and quantitative research processes. These are used to locate global infrastructure companies with good long-term growth prospects and stable cash flows. This includes an evaluation of areas like liquidity, balance sheet strength, and regulatory factors, among others.
As one would expect with a global infrastructure ETF, BKGI’s portfolio offers strong international diversification potential. That said, the fund holds a large portion of its portfolio weight in companies tied to the U.S. As of March 31, 2025, a little more than a third of the fund’s net assets are allocated to U.S. companies.
Unlike many of the other global infrastructure ETFs on the market, BKGI opts for active management. This enables the fund to be more flexible, and adapt to changing macroeconomic factors. Active managers can seek out securities that an index may miss.
Additionally, BKGI sets itself apart by offering distinct income potential. The fund includes dividend paying global infrastructure companies, with the goal of providing an annualized gross forward-looking 12-month yield of 6% or higher. This income can help bolster the value of a portfolio, even during periods of uncertainty.
With a large U.S. holding serving as a recognizable ballast, the remainder of BKGI’s portfolio remains internationally diversified. In particular, the fund holds notable exposure to countries such as France, Italy, and Finland.
Over the last 12 months, BKGI’s total return has grown over 24%, as of March 31, 2025. This marks significant outperformance compared to both the MSCI ACWI Index and S&P Global Infrastructure NR Index.
These strong returns come paired with attractive dividend yield potential. As of March 31, 2025, BKGI has an annualized dividend yield of 5.55%.
For more news, information, and strategy, visit our Portfolio Strategies Content Hub.
