Infrastructure Intelligence With This ETF
With Election Day about two months away, investors by now know that an array of industries, sectors and the corresponding exchange-traded funds have been affected by political chatter this year.
Healthcare stocks and ETFs have been front and center, taking several blows from Democratic nominee Hillary Clinton. Conversely, aerospace and defense ETFs are, in many circles, viewed as potential winners regardless of which candidate takes the White House. Infrastructure ETFs, including the Guggenheim S&P High Income Infrastructure ETF (NYSE: GHII) deserve some election year attention as well.
Giving GHII Some Well-Deserved Attention
Whether it is by virtue of a tantalizing trailing 12-month dividend yield of almost 4.8 percent or the expectations that Clinton or Republican nominee Donald Trump will spend big on infrastructure, GHII is up 27.5 percent year-to-date. The ETF, which debuted in February 2015, follows the S&P High Income Infrastructure Index.
GHII is a global ETF, meaning it holds U.S. stocks along with ex-U.S. companies. The ETF's underlying index “is composed of the 50 highest-dividend-paying companies within the S&P Global BMI that operate in the energy, transportation, and utilities sectors,” according to Guggenheim.
U.S. and Canadian companies combine for over 53 percent of GHII's weight, while the energy and utilities sectors combine for over 96 percent of the ETF's 54 holdings. The bottom line is GHII is sufficiently leveraged to speculation that infrastructure spending in the United States, regardless of the presidential election outcome.
Infrastructure ETFs And The Election
Data suggest that infrastructure ETFs, including GHII, should be spending more time the in the election year spotlight. After all, U.S. infrastructure is shabby. Earlier this year, the Center on Budget and Policy Priorities said infrastructure spending in the world's largest economy fell to a 30-year low.
Predictably, politicians differ on how much they would devote to infrastructure spending. Trump has touted a plan that could see $1 trillion spent on roads, railways and bridges, while Clinton's infrastructure plan is more docile — though still substantial — at $275 billion.
While past performance is never a guarantee of future returns, past performance does suggest GHII is a solid idea for playing increased infrastructure spending, should that scenario come to fruition.
Since GHII debuted in February 2015, it has outpaced five competing infrastructure ETFs. In fact, the Guggenheim offering is the only one of that group of six to generate positive returns from February 11, 2015, through September 2, 2016.
GHII's components are yield-weighted, which can potentially boost yield and income for investors.
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