Global X launches US Infrastructure Development ETF

Mar 9th, 2017 | By | Category: Equities

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New York-based ETF provider Global X Funds has unveiled the Global X US Infrastructure Development ETF (BATS: PAVE), offering investors a one ticket solution to access a sector positioned to benefit from Donald Trump’s fiscal expansion plans.

Global X launches US Infrastructure Development ETF

The American Society of Civil Engineers has estimated the cost to repair and modernize the US’s infrastructure will pass $10 trillion by 2040.

The fund tracks the Indxx US Infrastructure Development Index, a reference for the performance of companies involved in four infrastructure-related themes: 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.

To be eligible for inclusion in the index, companies must have their primary listing in the US, a minimum market capitalization of $300 million and a minimum average daily turnover for the last six months greater than or equal to $1m. All constituents must have a minimum free float equivalent to 10% of shares outstanding.

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 modernize the nation’s infrastructure is estimated to eclipse $10 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.

Jay Jacobs, director of research at Global X, commented: “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. 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 $5 trillion in currently funded projects, as well as those that could benefit from additional stimulus.

The fund’s underlying index currently has 88 securities which are weighted by market capitalization with a single issuer cap of 3%.

Using back-tested data, the index rose 9.8% per annum from 31 January 2011 to 1 March 2017.

Indxx US Infrastructure Development

Source: Indxx.

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