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Trump or Biden, Infrastructure ETFs to Soar Higher

Chances are rising that the blue wave of Democrats will take control over the House and Senate in November. Democratic presidential candidate Joe Biden now has better chances of winning the November election, according to a national poll. President Trump presently has a 40% chance of winning the White House compared with about 50% in May.

Joe Biden proposed $1.3 trillion infrastructure overhaul last year. Though he said he will fund the plan through tax increases on the wealthy and corporations, we see moderate increases in both tax rates as well as infrastructure activities under Biden’s rule.

The Democratic presidential candidate’s campaign eyes investing in restoring highways, roads and bridges, while trying to boost adoption of electric vehicles and trains. His plan also calls for changing water pipes, building out rural broadband access and updating schools, among other measures.

Meanwhile, the Trump administration is also reportedly preparing a nearly $1 trillion infrastructure plan as part of its efforts to bolster the American economy. The Department of Transportation's preliminary version takes care of most of the funding for projects such as roads and bridges, but also kept money for 5G wireless infrastructure and rural broadband.The present U.S. infrastructure funding law, known as the FAST Act, permits $305 billion over five years. The limit expires on Sep 30.

Since both Democratic and Republican candidates are vowing for boosting infrastructure spending, it can be concluded that infrastructure ETFs could be gainers no matter who wins in the presidential election 2020. If this was not enough, a super-dovish Fed, its zero-rate policy and an unlimited QE policy is likely to boost capital-intensive as well as debt-heavy infrastructure sector. Additionally, some infrastructure ETFs offer hefty dividend yields too.

Against this backdrop, below-mentioned infrastructure ETFs should be on watch.

iShares U.S. Infrastructure ETF (IFRA)

The fund offers exposure to U.S. infrastructure companies that could benefit from a potential increase in domestic infrastructure activities. The 135-stock fund charges 40 bps in fees. The fund yields 2.26% annually. This is way higher than the benchmark U.S. treasury yield of 0.67% annually, as of Jul 8, 2020.

Invesco Dynamic Building & Construction ETF (PKB)

The underlying Dynamic Building & Construction Intellidex Index comprises stocks of U.S. building and construction companies. The fund charges 60 bps in fees(read: A New $1T US Infrastructure Bill on the Way? ETF & Stock Picks).

Global X U.S. Infrastructure Development ETF (PAVE)

The fund measures the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment. The fund charges 47 bps in fees.

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Invesco Dynamic Building Construction ETF (PKB): ETF Research Reports
 
Global X U.S. Infrastructure Development ETF (PAVE): ETF Research Reports
 
iShares U.S. Infrastructure ETF (IFRA): ETF Research Reports
 
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