Will This ETF PAVE the Way for More Infrastructure Gains?

The Global X U.S. Infrastructure Development ETF (PAVE) has paved the way for the full suite of Global X ETFs the past month.

Infrastructure has been a hot topic ever since U.S. president Joe Biden revealed his $2 trillion plan. The proposal includes a comprehensive plan to address not only infrastructure, but also home/community care, affordable housing, electric vehicles, and broadband internet access to under-served areas, to name just a few.

Investors saw this as an opportunity to hop on ETFs that could benefit from Biden’s proposal, including ETFs that focus on clean energy or electric cars. Others opted for broader infrastructure assets like PAVE.

Infrastructure On Investors' Minds The Past Month With This Global X ETF 1

PAVE seeks to provide investment results that correspond generally to the price and yield performance, of the Indxx U.S. Infrastructure Development 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.

The Global X ETF has been an obvious beneficiary of the infrastructure plan, as the fund is up 23% so far this year. It is also up close to 100% the last 12 months.

PAVE Chart

Congress Still Negotiating Spending Parameters

A key mover for PAVE the rest of the year will be the back-and-forth political ramifications inherent in any budget proposal.

“Republicans last month proposed spending $568 billion on infrastructure, offering a far narrower and less expensive alternative to the plan Mr. Biden unveiled in March, which would spend $2.3 trillion over eight years on programs and services that go beyond transportation, among them home care for seniors and technology and manufacturing research,” a Wall Street Journal article said.

“In addition, Mr. Biden announced a $1.8 trillion child-care and education plan in his joint address to Congress last week. GOP lawmakers have said they think it might be possible to reach a bipartisan agreement on a more limited package focused on roads, bridges and other elements of physical infrastructure,” the article added.

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