Watch This ETF as Capitol Hill Puts Infrastructure in Its Sights

U.S. President Joe Biden’s infrastructure plan will come under the proverbial microscope this week, which should put the Global X U.S. Infrastructure Development ETF (PAVE) in focus.

When the plan was first introduced, anything remotely associated with the initiative got a major boost. Analysts were quick to parse the plan and find any opportunities, such as clean energy and electric vehicles.

“President Biden’s economic agenda is set to face a major test on Capitol Hill this week, as the Senate barrels toward an early vote on a roughly $1 trillion proposal to improve the nation’s infrastructure even though negotiators still haven’t agreed on key details,” a Washington Post article said.

“Despite months of frenetic talks, lawmakers are slated to return to the Capitol on Monday in the same political position in which they departed last week: They broadly support new spending to upgrade the nation’s roads, bridges, pipes, ports and Internet connections, yet remain plagued by schisms over how to finance the still-forming package,” the article added.

PAVE, which is up 16% for the year, seeks to provide investment results that correspond generally to the price and yield performance of the Indxx U.S. Infrastructure Development Index. The fund invests at least 80% of its total assets in the securities of the underlying index.

The underlying index is designed to measure the performance of U.S.-listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites, and products; industrial transportation; and producers/distributors of heavy construction equipment.

PAVE Chart

IRS Component in Contention

One of the main topics of contention regarding the infrastructure bill was the enforcement of unpaid taxes by the Internal Revenue Service (IRS) as a revenue-raising strategy to help fund the plan. This revenue-raising measures was eventually taken off the table as a result of political pushback.

“One reason it’s not part of the proposal is that we did have pushback, said Sen. Rob Portman, R-Ohio, in a Fox Business article. “Another reason is that we found out that the Democrats were going to put a proposal into the reconciliation package which was not just similar to the one we had, but with a lot more IRS enforcement. So that created quite a problem.”

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