Dow Jones Rolls Out Family of Global Infrastructure Indexes

By Heather Bell

Perhaps as a direct consequence of the growth of emerging markets and commodities markets, another area has been of increasing interest to investors: infrastructure.

You could probably describe infrastructure as the framework that supports civilization. All the very basic things the developed world takes for granted—roads, bridges, sewers, electricity, running water—are examples of infrastructure. With emerging markets having seen explosive growth, they are now developing their own infrastructures and making use of them—and of course, developed countries continue to maintain and expand their own infrastructures even as their governments shift more of the responsibility for that onto the private sector. A figure provided by Brookfield Asset Management puts the global amount to be spent on infrastructure on an annual basis through 2015 at $2 trillion. From now until then, that's about $15 trillion.

There are already two infrastructure ETFs trading—the iShares S&P Global Infrastructure Fund (NYSE: IGF) and the SPDRS FTSE/Macquarie Global Infrastructure 100 ETF (AMEX: GII)—plus a few still in registration that cover the infrastructure sector.

Dow Jones Indexes has responded to the interest by partnering with Brookfield Asset Management, an asset manager that actually focuses on infrastructure-related investments, to create an entire family of indexes focused on the global infrastructure sector. The series includes composite and blue-chip indexes covering sectors and geographic regions. Composite and narrow indexes are available for the world, the Americas, Europe, Asia-Pacific and the World ex-U.S. The family's eight sector indexes cover airports, communications, oil and gas storage, ports, electricity transmission and distribution, toll roads, water and diversified infrastructure operations. There is also a separate index that covers only master limited partnerships (MLPs).

Eligible components must have float-adjusted market capitalizations of at least $500 million and a minimum three-month average daily trading volume of $1 million. They must also derive at least 70% of cash flows from infrastructure-related business activities. Investment funds that primarily hold infrastructure-related assets are also eligible. The indexes are reviewed quarterly.

"As the global infrastructure industry—which is the backbone for the provision of essential products and services for the world economy—continues to expand in response to increasing population and demographic shifts, there is a greater demand among investment professionals for high-quality benchmarks that accurately reflect this burgeoning asset class," said Dow Jones Indexes President Michael A. Petronella, adding that the indexes can be used as benchmarks for infrastructure-focused portfolios. The blue-chip indexes in the family are designed to underlie investable products.

The headline Dow Jones Brookfield Global Infrastructure Index, which is the narrow version of the Dow Jones Brookfield Global Infrastructure Composite Index, has 94 components and a total float-adjusted market capitalization of $301.1 billion. The U.S. represents 37.55% of the index, followed by the United Kingdom at 19.44%, Spain at 8.08%, Australia at 7.01% and Canada at 7.00%.

There is no word on whether the new indexes have been licensed to be used as the basis for products. 

Dow Jones Brookfield Global Infrastructure Index Top 10 Components
Company	Country	Weight
National Grid PLC (NGG)	U.K.	10.16%
Spectra Energy Corp. (SE)	U.S.	5.98%
American Tower Corp. (AMT)	U.S.	5.56%
Enbridge Inc. (ENB)	Canada	4.78%
United Utilities PLC (UUPLY.PK)	U.K.	4.00%
Consolidated Edison Inc. (ED)	U.S.	3.51%
Crown Castle International Corp. (CCI)	U.S.	3.09%
Red Eléctrica de España S.A. (RDEIF.PK)	Spain	2.34%
Abertis Infraestructuras S.A. (ABFOF.PK)	Spain	2.31%
Atlantia S.p.A. (ATASF.PK)	Italy	2.21%

Comments

[User 223455]

they do have near zero volume; would you trade them ?

[Coreyp]

SLX, (pure play steel) has a lot more volatility but the trends are similar and I believe a better play for infrastructure - if you can withstand the vol.

[etfman]

I am pleased to see Spectra Energy and Enbridge on this list. I own both. They are steady growers, sporting decent dividends.