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The Global X Infrastructure ETF Isn't Waiting On A Trump Bill

February 9, 2018 9:57 am
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On Capitol Hill, infrastructure is something of an anomaly. The issue usually has bipartisan support, but the anomaly ends there because, as is the case with most issues debated by Congress, it takes a long time for an agreement to be reached. 

During the 2016 presidential campaign, President Donald Trump promised to spend $1 trillion shoring up American infrastructure, including airports, bridges, highways and rail systems. Seeking plays on Trump infrastructure largess, some investors embraced established infrastructure exchange traded funds while some issuers created new products, such as the Global X U.S. Infrastructure Development ETF (NASDAQ:PAVE).

PAVE is now a few weeks shy of its first birthday and the Global X fund has carved out an interesting niche among infrastructure ETFs by focusing solely on U.S. stocks. Many established infrastructure ETFs are global funds, featuring exposure to companies based outside the U.S.

No Need To Wait

Investors considering PAVE, which is up more than 11 percent over the past six months, do not need to wait for Congress to pass new infrastructure legislation — several major projects are underway that could be catalysts for the ETF. Even when excluding California's $68-billion high-speed rail project, which could slip in terms of state priorities when Gov. Jerry Brown departs office later this year, other projects could bode well for PAVE.

For example, New York City is spending $10.5 billion to shore up the Second Avenue Subway, while Charlotte is spending $1.2 billion on light rail expansion.

“Originally proposed in 1910, the first phase of this project was completed in early 2017. The second phase of this project, costing $6 billion, will run from 96th street to 125th street in Manhattan and reduce pressure on the Lexington line, which serves 1.3 million commuters each day,” said Global X regarding the Second Avenue subway project. “The federal government — in addition to state and local agencies — will be paying for the project.” 

The Top 10

PAVE, which holds 89 stocks, has recently become popular with investors. At the end of 2017, the ETF had about $29.3 million in assets under management, a figure that has since swelled to nearly $71 million.

“In the United States alone, the 10 largest infrastructure projects proposed come with a combined cost of $132.6 billion,” said Global X. “Given the robust list of projects underway and planned, we believe that local, state, and federal politicians, as well as private sector investors, understand the country’s significant infrastructure needs and are already seeking to address these issues.”

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