Infrastructure touches every aspect of our daily lives. Airports, roads, rail, bridges, ports, and transit are crucial for transportation. Utilities such as water, power, and gas are essential for daily living. Few modern economies can survive without wastewater, waste treatment, dams, parks, and schools.
U.S. investment in infrastructure is long overdue. According to a report from the American Society of Civil Engineers (ASCE), if Congress maintains current levels of spending, there will be a $3.7 trillion funding gap over the next decade needed to "maintain a state of good repair" in U.S. infrastructure.
Everything points to an ongoing need for investment in infrastructure.
The latest ASCE report notes that the most significant needs for investment over the next decade are in:
- Surface transportation: $3.5 trillion.
- Energy: $1.9 trillion.
- Drinking water/wastewater/stormwater systems: $1.7 trillion.
Given this backdrop, it's a good idea to look at getting broad-based exposure to the theme by investing in infrastructure ETFs.
Top infrastructure ETFs
Investing in an exchange-traded fund (ETF) gives you exposure to a specific industry, theme, or geography. The three leading infrastructure ETFs by assets under management are:
Top Infrastructure ETFs | Ticker Symbol | Net Assets |
|---|---|---|
Global X U.S. Infrastructure Development ETF | $7.5 billion | |
iShares Global Infrastructure ETF | $6.4 billion | |
FlexShares STOXX Global Broad Infrastructure Index Fund | $2.4 billion |
The overarching theme of the ETF is to give investors exposure to the megatrend of urbanization and the need to build supporting infrastructure. Consequently, airports, ports, energy, and utilities (electric, water, gas, and renewable energy) are vital investments for the ETF.
You can think of this iShares ETF as a play on global infrastructure spending. Although it may not have the same exposure to the U.S. industrial sector as the Global X ETF, it's more of a pure-play infrastructure ETF.
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