The FlexShares STOXX Global Broad Infrastructure Index Fund (NYSEArca: NFRA) is higher by more than 10% over the past 90 days and there are credible reasons explaining that move.

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.

Some market observers believe riskier assets aren’t adequately reflecting the shortening odds of former Vice President Joe Biden defeating President Trump in November. Others assert a Biden victory won’t be as bad for stocks as investors may currently believe. However, Trump may still have some say when it comes to infrastructure.

“The potential infrastructure bill could act as a catalyst for the economy. FlexShares sees opportunity in infrastructure for those who hop on the trend early, as the bill is considered an opportunity to re-stimulate the U.S. economy and job market,” according to FlexShares. “When investing in infrastructure ETFs, as with FlexShares’ NFRA fund, the firm believes investors should look to incorporate both traditional and non-traditional infrastructure sectors.”

Right Fund, Right Time

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.

How infrastructure dollars are spent is equally as important as knowing those dollars are earmarked for infrastructure in the first place. During the 2016 presidential campaign, Trump promised to spend $1 trillion to shore up America’s sagging infrastructure, but politicians have clearly agreed to exceed that number. That promise is likely to be reiterated on the campaign trail this year.

The proposed infrastructure spending plans could extend the law authorizing highway and other surface transportation funding. Under the current law, or the FAST Act, an authorized $305 billion was spent over five years and is set to expire on September 30.

NFRA yields 2.32%

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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.