5 Bipartisan Picks in Infrastructure

10/27/2016 9:00 am EST

Focus: ETFs

Doug Fabian

Editor, Successful ETF Investing, ETF Trader's Edge, Weekly ETF Report, and ETFU.com

There is a market segment that I haven’t really focused on in years past, but for a variety of reasons, deserves attention now — infrastructure, suggests Doug Fabian, editor of Successful ETF Investing.

One big reason why is because despite the many differences between the two presidential candidates, one thing they have in common is that both want to put federal dollars to work on improving America’s highways, bridges, airports and other grand infrastructure projects.

In fact, both Trump and Clinton have said that a goal of their respective administrations would be to put money to work in big infrastructure projects.

In the case of Trump, the argument is that these projects would help make the country great again.

In Clinton’s case, her argument is that putting more government money into the economy would create jobs and help jumpstart gross domestic product (GDP) growth.

Now, while both of these objectives can be legitimately questioned, if either candidate gets his or her way, what can’t be questioned is the likely beneficiaries, which are companies that build roads, bridges and airports. 

And then there are the companies that supply the raw materials that help make those roads, bridges and airports possible. The companies engaged in this business come from a variety of sectors and, unfortunately, there is not a pure-play infrastructure ETF that’s U.S.-based.

However, there is an international infrastructure ETF that we like, as most governments around the world are committed to fiscal stimulus via infrastructure spending.

There also are several other sector-related ETFs, such as industrial stocks, and funds that specialize in infrastructure projects that are focused on income generation.

The iShares Global Infrastructure (IGF) is the pure-play international ETF in the space, while the Vanguard Industrials (VIS) and the Industrials Select Sector SDPR (XLI) are two of the better industrial stock funds.

For a more focused option, there’s the FlexShares STOXX Global Broad Infrastructure ETF (NFRA), which holds the biggest names in telecom and railroads and related sectors.

Then there is the First Trust North American Energy Infrastructure ETF (EMLP), which holds the biggest energy and pipeline master limited partnerships.

We’re still waiting for the next market buying opportunity. However, if the infrastructure spending wave gets set into motion by the next president, look for these funds to ride to big profits for investors.

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By Doug Fabian, Editor of Successful ETF Investing

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