Spending on infrastructure is a typical election year theme, but with the economy still fragile and Election Day just a few months away, ETFs such as the AGFiQ Global Infrastructure ETF (GLIF) are taking on added importance.
The AGFiQ Global Infrastructure ETF uses a multi-factor investment process to seek long-term capital appreciation by investing primarily in global equity securities in the infrastructure industry. President Trump is pitching a 10-year, $1 trillion infrastructure plan, which is scaled back from his 2016 campaign trail plan. Indeed, costs play a role in determining the fate of domestic infrastructure efforts.
Back in 2016, infrastructure stocks rallied in advance of the election as investors bet regardless of whom won the presidential election that year, infrastructure spending would increase.
“Yet here we are in 2020, and little has been done on the infrastructure front — despite many experts saying trillions of dollars need to be spent on transportation and broadband networks,” reports Paul LaMonica for CNN Business.
Investigating Infrastructure
With the White House looking to unleash a massive wave of stimulus onto the U.S. economy and in an effort save jobs numbers from sliding, infrastructure could be in style as the coronavirus situation, hopefully, eases soon. Some data points confirm that some of the stimulus packages should be going toward infrastructure.
“But this stimulus may be even more urgent now during the Covid-19 pandemic: Millions of Americans are out of work. Federal money earmarked for infrastructure could serve as a modern-day version of FDR’s New Deal or Eisenhower’s Federal Aid Highway Act,” according to CNN.
The strong, consistent demand for infrastructure has delivered stable, repeatable cash flows to investors. Meanwhile, population growth, aging infrastructure, and constrained government budgets are creating opportunities for the private sector. The high cost of entering the infrastructure business also limits competition or provides a wide economic moat for those already in the field.
In theory, GLIF should benefit because infrastructure is one of a small number of bipartisan issues politicians consider.
“There is a bipartisan call for such spending. New York Governor Andrew Cuomo, a Democrat, is pushing for an infrastructure package. So are Republican senators Roy Blunt and Roger Wicker,” according to CNN.
GLIF is higher by 6.44% over the past month.
For more alternative investing ideas, visit our Alternatives Channel.
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.
