Tuesday, August 11, 2009

The stimulus and Infrastructure ETFs

Most OECD countries are promoting economic stimulus packages focused on infrastructure.

See, for example, "Economic stimulus packages, Innovation and Green Growth:
New opportunities for PPPs

"When it comes to “Measures relating to innovation and long term growth”, OECD and non-OECD economies focus on the following themes in existing economic stimulus packages:
· Improving the infrastructure (e.g. roads, mass transit, information and communication technologies [ICT]).
· Support for science, research and development (R&D) and innovation.
· Investment in human capital, education/training (including schools, teachers).
· Promoting the investment in and uptake of green technologies and innovations to foster energy efficiency and sustainable economic growth.
· Support for innovation and entrepreneurship (including support for innovation and investment in small and medium-sized enterprises [SMEs], venture capital, etc.)".

How can an average investor take advantage of this stimulating package?

- investment in alternative energy and green technologies (alternative energy ETFs discussed in a previous post; another option: PowerShares "CleanTech" PZD)
- investment in R&D related companies (for example, the Claymore/Ocean Tomo Patent ETF OTP)
- investment in small-cap companies (for example, Vanguard Small-Cap ETF VB). Other suggestions from the Motley Fool here.

And, finally, investment in infrastructure ETFs. Here are a few options:

- ISE Global Engineering and Construction Index Fund (FLM)
- PowerShares Emerging Markets Infrastructure Portfolio (PXR), with greater concentration in emerging markets and natural resources.
- iShares S&P Global Infrastructure Fund (IGF)
- SPDR/FTSE Macquarie Global Infrastructure Fund (GII) (with a heavy emphasis on utilities, 90 % of holdings)
- PowerShares Dynamic Building & Construction Portfolio (PKB)
- Powershares Water Resources (PHO)

Here a couple of recent articles on the topic:

- ETFs for Infrastructure. Obama's plan for new U.S. spending could benefit funds that hold construction, engineering and alternative-energy stocks

- 5 Infrastructure ETFs That Could Enhance Your Portfolio

- First Trust Launches ETF With Infrastructure Twist

- EM Infrastructure Index Launches

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