The American Society of Civil Engineers assigns a grade of D+ to the quality of U.S. roads, bridges and other infrastructure, and recommends related investment to rise from the current ~2.5% of U.S. GDP to 3.5% by 2025.
In its “Infrastructure Report Card” issued every four years, the group forecasts that it would cost nearly $4.6T over the next decade to improve U.S. infrastructure to a safe, functioning level, ~$2T more than governments and the private sector are planning to spend.
The group defines the D+’ grade as infrastructure that is “in fair to poor condition and mostly below standard, with many elements approaching the end of their service life."
“Pres. Trump is onto something as he calls for a new program of national rebuilding," says the group's president; Trump said recently that he wants states to be ready to start projects within 90 days of receiving funding.
The Guggeheim High Income Infrastructure ETF (NYSEARCA:GHII), looks to appeal to income investors by weighting its components by 12-month yield, rather than market cap.
"Global infrastructure securities represent a unique opportunity to invest in an important and growing asset class,” said William Belden, Managing Director of Product Development for Guggenheim Investments in a press release. “One of the attractive investment features of infrastructure companies is their comparatively stable yield regardless of market or business cycles."
Twitter's down 32% this year, Facebook's off 20% in a month, and biotech nearly that much, but money is returning to the industrial sector. While the Nasdaq 100 posted its worst one-day drop since 2011 on Friday and last week fell for the 3rd week in 4, the Industrial Select SPDR (XLI) gained 1.6%.
In the year's first quarter, the XLI had lost 1.4%, putting it in 9th place among 10 S&P 500 groups.
"You’re seeing the beginning of investors shifting money ahead of a wave of spending,” says Drew Nordlicht of HighTower Advisors. “The expectation is, as the economy begins to kick into a higher gear, corporate America will utilize the amount of cash to spend on capital expenditures."
GE comprises more than 10% of the XLI, and UTX, Union Pacific, Boeing, and 3M round out the top 5, each with holdings in the 5% range.
The ProShares DJ Brookfield Global Infrastructure ETF (TOLZ) will track an index of companies have key operations in the global infrastructure sector, with a preference for companies that focus on long term and stable cash flows.
Within the manufacturing sector there are only a few ETFs that offer pure exposure to the infrastructure sub-sector, but with an expense ratio of .45%, TOLZ undercuts them all.
Opening for trade today is Northern Trust's (NTRS) FlexShares Stoxx Global Broad Infrastructure Index Fund (NFRA) with expense ratio of 0.47%. It will track an index comprising infrastructure-related companies in both developed and emerging markets.
As of mid-September the top 5 countries in the tracked index are the U.S. at 38%, Japan 11.6%, the U.K. at 10.6%, Canada 10.4%, and Germany 6.1%.
The two largest competing ETFs are the iShares Global Infrastructure Fund (IGF) with $596M in AUM, and the SPDR S&P Global Infrastructure ETF (GII) with $52.6M in AUM.