Infrastructure ETFs Suffer from Lack of Spending

Includes: EMIF, GII, IGF, PXR
by: Tom Lydon

Infrastructure is a sector that has lacked substantial investment and any further negligence of this area may put economic growth at risk, experts believe. The renewed sense of urgency could benefit infrastructure ETFs.

Governments around the world need to increase their spending on agriculture, energy, water, transport and information technology infrastructure. But where will the money come from? In the United States, stimulus money is still being deployed.

Lloyd’s reports that underinvestment in infrastructure is one the most highly interconnected risks, among others such as:

  • Telecommunications systems are heavily relied on by many industries, most importantly emergency services.
  • Power grids are vulnerable; failures have impacted more than 50 million people in North America since 2003.
  • A lack of infrastructure spending means that disease spreads more rapidly.
  • Major port closures could occur, which would choke off world trade and have widespread consequences at a time when we need world trade most.

Shawn Langlois and William Spain for MarketWatch report that Caterpillar (NYSE: CAT) wrapped up what it said was the worst economic year it had faced in generations. This year could be better - the heavy-machinery giant is signaling a cautious outlook for 2010, after a steep drop in fourth-quarter profit.

  • iShares S&P Global Infrastructure Fund (NYSEArca: IGF)

  • SPDR FTSE/Macquarie Global Infrastructure 100 (NYSEArca:GII)

  • PowerShares Emerging Markets Infrastrucutre (NYSEArca: PXR)

  • iShares S&P Emerging Markets Infrastructure (NYSEArca: EMIF)