Infrastructure-related investments were bolstered during last year’s U.S. presidential campaign as both Donald Trump and Hillary Clinton promised substantial increases to spending aimed at shoring up America’s failing bridges, highways, roads and railways.
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.
Several exchange traded funds allow investors to tap the infrastructure investing theme, including the Legg Mason Global Infrastructure ETF (NASDAQ: INFR).
INFR, which debuted in December 2016, tracks the performance of the RARE Global Infrastructure Index, which is comprised of global infrastructure-related equities. The underlying index will also screen for other factors, including a liquidity filter for companies with a minimum of $500 million market capitalization and a 1-year average daily value traded of $2 million, along with those ranked from the highest dividend yield and cash flow yield. Components are then weighted by market capitalization and free float, RARE exposure score, price volatility and region.
The ETF can include utilities infrastructure sectors, including electric utilities, gas utilities, independent power producers & energy traders, multi-utilities, renewable electricity and water utilities. Additionally, the fund may hold economically sensitive infrastructure sectors, including airport services, cable & satellite, highways & rail tracks, marine ports & services, oil & gas storage & transportation, railroads, and specialized real estate investment trusts.
Related: An Intelligent Infrastructure ETF Investment
As its name implies, INFR is a global fund. U.S. stocks accounted for a third of INFR’s weight at the end of the third quarter with Canada and Australia combining for nearly a quarter. Overall, INFR features exposure to 24 developed and emerging markets. The ETF is up 17% year-to-date.
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.
The weighted average market value of INFR’s 103 holdings is $34.1 billion. Utilities and industrial stocks combine for nearly 78% of the ETF’s weight with the energy sector chiming in at 14.6%. INFR charges 0.53% per year, or $53 on a $10,000 investment.
For more information on the infrastructure sector, visit our infrastructure category.