As has been widely documented, infrastructure exchange traded funds, including the FlexShares STOXX Global Broad Infrastructure Index Fund (NYSEArca: NFRA), are in the spotlight leading up to Election Day, but there’s a compelling case for NFRA and friends after the election.

NFRA tries to reflect the performance of the STOXX Global Broad Infrastructure Index, which identifies equities that derive the majority of revenue from infrastructure business, providing exposure to not only infrastructure sectors, but non-traditional ones as well. Investors considering NFRA or any other infrastructure asset are betting this time will be different when it comes to policy execution and implementation.

A blue wave could lead to massive stimulus efforts, potentially supporting infrastructure projects along the way.

“A Democratic ‘blue wave’ in November could unleash the fiscal floodgates and fuel the amount of stimulus flowing from Washington, Goldman Sachs told its clients on Monday,” reports Thomas Franck for CNBC.

Stimulus As An NFRA Catalyst

Obviously, President Trump and former Vice President Joe Biden, the Democratic nominee, have different approaches to the infrastructure issue. One area the president is focusing on is efficiency in the permitting process to help projects get across the finish line. Said differently, the case for NFRA won’t be diminished if Trump pulls off the upset.

NFRA’s index focuses on long-lived assets in industries with very high barriers to entry, with at least 50% of their revenue from key sectors with a 3-month average daily trending volume of at least $1 million. The portfolio is weighted based on a free-float market cap with certain constraints to limit exposure in any one security, sub-sector, or country. Additionally, the fund is rebalanced annually.

NFRA YTD Performance

Still, there’s a strong case for NFRA against the backdrop of a blue wave.

“Goldman Sachs also reiterated its finding that the boost to U.S. economic growth from fiscal stimulus favored by the Biden campaign would ‘outweigh the negative effects of tax increases, particularly in light of the fact that the increased tax revenue would go to funding new spending,’” according to CNBC.

With a dividend yield of 2.33%, NFRA is up about 1% over the past month, perhaps a sign it’s pricing in a Biden victory.

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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.