With the fourth industrial revolution gaining momentum, investors are looking for ways to tap next generation technologies. Ideas include the SPDR Kensho Intelligent Structures ETF (NYSEArca: XKII).
The Kensho Intelligent Structures ETF follows companies whose products and services are driving innovation behind intelligent infrastructure, such as smart building infrastructure, smart power grids, intelligent transportation infrastructure, and intelligent water infrastructure.
XKII, which debuted last December, follows the Kensho Intelligent Infrastructure Index. That index “is designed to capture companies whose products and services are driving innovation behind intelligent infrastructure, which includes the areas of smart building infrastructure, smart power grids, intelligent transportation infrastructure, and intelligent water infrastructure,” according to State Street Global Advisors (SSgA).
A Different Infrastructure Idea
Investors have long recognized that the U.S. and other major economies face massive infrastructure needs and that global infrastructure spending is poised to jump significantly in the years ahead.
“From a global perspective, McKinsey & Company estimates the world needs to invest $3.3 trillion annually in infrastructure to meet global growth forecasts of 3.3% by 2030, an increase from the current $2.5 trillion,” said SsgA.
Investors who are considering future drivers of the economy that may be overlooked by traditional methodologies should consider the nascent industries associated with themes like artificial intelligence, hyperconnectivity, exponential processing power, robotics, automation and democratized infrastructure.
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XKII offers a fresh view on infrastructure investing. While many legacy infrastructure funds are heavily allocated to sectors such as energy and utilities, XKII features exposure to over a dozen industry groups, many of which dwell in the industrial and technology sectors. The ETF holds nearly 50 stocks. For example, XKII allocates nearly 15% of its weight to semiconductor makers, a trait not often seen among traditional infrastructure investments.
“Without being constrained to traditional GICS sector classifications, the Kensho Intelligent Infrastructure Index attempts to harness the potential increase in infrastructure spending in an age of increasing technological advancements that touch every facet of our life,” said SSgA. “It goes beyond well-known traditional industrial firms by including companies involved in intelligent and connected home technologies, smart power grid technology, road sensors, traffic management infrastructure and smart water meters from other GICS-related sectors.”
XKII is up 1.10% over the past month.
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