The FlexShares STOXX Global Broad Infrastructure Index Fund (NYSEArca: NFRA) and other infrastructure ETFs could be in focus over the next several days because the White House releases its latest budget today, one that’s likely to include clues about President Trump’s infrastructure efforts.
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.
“The budget proposal President Trump will release Monday is expected to lay bare how much he has adjusted to the political and practical limits of Washington, with some of his biggest campaign promises from 2016 cast aside and replaced with more limited policy ambitions,” reports The Washington Post.
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.
Scaling Back Not Necessarily Bad
Moreover, the state-level opportunity set for NFRA could be long-ranging and last several years, if not longer, particularly as larger states enter the infrastructure spending fray.
Investors who want to access global infrastructure investments through a liquid vehicle may consider NFRA as an alternative to being forced into long lock-up periods and high initial investments associated with direct infrastructure exposure.
“On immigration, health care, infrastructure and the deficit, the final budget pitch of Trump’s first term will look much different from the campaign platform he offered four years ago,” according to the Post.
The U.S. Department of Transportation is already showing that infrastructure is going to be a major priority in 2020.
“The U.S. Department of Transportation recently unveiled an interactive map depicting federal investment in major infrastructure projects in underserved rural and urban communities,” reports Transport Topics.
NFRA is higher by 17% over the past year.
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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.