New York based provider of ETFs, Global X Funds, has launched the Global X US Infrastructure Development ETF.
Designed to track the Indxx US Infrastructure Development Index, the fund holds a basket of companies involved in the maintenance and development of infrastructure projects, including those involved in construction & engineering; the production of materials and composites; the transportation of those materials; and the distribution of heavy machinery.
In 2013, the American Society of Civil Engineers (ASCE) released its quadrennial "Infrastructure Report Card" which gave the US a D+ rating. The cost identified to repair and modernise the nation's infrastructure is estimated to eclipse USD10 trillion by 2040, half of which is currently unfunded.
PAVE invests primarily in companies involved in the construction and development aspects of infrastructure. This differs from some existing infrastructure funds that primarily hold the owners and operators of infrastructure, like utility and energy companies.
"In the past few years, we've seen the national discourse coming to a bipartisan agreement that the United States needs to heavily invest in rebuilding our national infrastructure. Many strategies, however, are focused on providing exposure to existing infrastructure assets, rather than the companies that should be heavily relied upon to maintain, update, and build new infrastructure projects," says Jay Jacobs, director of research at Global X. "Our focus has always been on bringing products to market that offer investors access to untapped market segments, and PAVE is a continuation of this goal."
PAVE provides exposure to companies that can potentially benefit from both the USD5 trillion in currently funded projects, as well as those that could benefit from additional stimulus. The companies held in PAVE can potentially benefit from private and public spending; from both development of new projects and general upkeep; and over the course of multiyear-long projects.