With infrastructure assets drawing renewed attention from investors, some ETFs stand ready to thrive in the new year. Count the AGFiQ Global Infrastructure ETF (GLIF) as part of that group.
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.
The infrastructure category has also historically offered higher dividend yields than global fixed-income and global equities, along with greater predictability of long-term cash flows. The ETF may be able to capture the growing demands of economic developing that are driving more funding into transport, power, and other systems.
GLIF has the potential to deliver for investors in 2020.
“U.S. transportation infrastructure growth will continue moving more or less in step with leveling off GDP next year,” said Fitch Ratings in a recent note. “Volume growth remains favorable for U.S. airports, ports and toll roads and will remain largely tethered to U.S. GDP movement, which Fitch projects will fall below 2% for 2020.”
Going With GLIF
With infrastructure, they are looking for areas with a quality bend, exhibiting lower volatility. Traditionally, a lot of infrastructure has been built around components of the Dow Jones. However, the ability to widen has allowed for enhanced diversification of the portfolio, which is a primary goal. Using the quantitative background enables AGFiQ to cast a wider net.
“Moving more closely in tandem with U.S. GDP next year will be U.S. toll roads and ports,” notes Fitch. “Stronger performance is expected for toll roads in the Southeast and Southwest regions in particular, due to stronger demographic trends versus the U.S. overall. Meanwhile, volumes at East Coast ports are likely to continue outpacing those of their West Coast counterparts due to their higher exposure to Chinese tariffs. Over time, revenues may start to decline at West Coast ports the longer the trade impasse with China continues.”
One of the advantages of infrastructure is that regardless of what the global economy is doing, it’s a necessity. Furthermore, it’s less prone to the cyclical movements of the economy, which makes it a viable alternative as a defensive play.
GLIF is up 5.5% this month.
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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.