Infrastructure ETFs: 5 That May Enhance Your Portfolio

Bob Frick at Kiplingers called his feature article, The Great Global Building Boom. Jim Cramer described infrastructure as one of the most bankable bull market trends. And Marge Simpson lamented that Main Street was all cracked and broken.

Ive written at length about infrastructure in the past. but its worth a second look. (And a third, and a fourth, and a twenty-fourth!)

Infrastructure improvement refers to the need for developed nations and emerging countries to create certain facilities. Chiefly? Areas need transportation and communication networks. They require power plants for electricity. They need drinking water and wastewater disposal systems. AND everyone needs to do this in a more environmentally friendly way than its been done in the past.

The iShares Infrastructure Fund (IGF) offers all-in-one access to the concept. However, volume has been light and performance has been shaky. The SPDR/FTSE Macquarie Global Infrastructure Fund (GII) has been less volatile. Yet, in my opinion, GII replicates utilities at the exclusion of energy infrastructure and transportation infrastructure.

Clearly, infrastructure needs extend beyond turning on the lights and the water. You need roads, bridges, railways, airports, hospitals and Internet access just to name a few. You also need companies that manufacture the industrial metals or materials for the infrastructure build-out.

It follows that there are a number of ETFs that fit the bill. The 5 that I list below are by no means intended to be comprehensive; rather, I am merely picking some that relate strongly to the broadly defined concept.

Market Vectors Steel (SLX)

Powershares Water Resources (PHO)

PowerShares CleanTech (PZD)

Market Vectors Nuclear Energy (NLR)

iShares Global Materials (MXI)

Steel prices have gone through the proverbial roof. And steel companies, as well as the expertise that they provide, are in high demand. Market Vectors Steel (SLX) is a strong way to play the backbone angle. (Read ETF Investing for Rainy Days .)

Some believe that water shortages mean that water is the one commodity that has yet to soar in price. Yet once again, I am more inclined to talk about the companies that have water delivery and water maintenance expertise. The Powershares Water Resources (PHO) is not a commodity play; instead, it is a sensible prospect because the companies involved are global gurus on delivering potable water and managing or treating wastewater. (Can you have infrastructure without sewage systems?)

PowerShares CleanTech is a greener take on infrastructure. Unlike the U.S. industrial revolution, the next wave of international growth will be cleaner more resource-conscious. It follows that resource efficiency expertise, or cleantech, is a tremendous infrastructure asset. (Read Cleantech ETF: Part Infrastructure, Part Green, Part MidCap Growth .)

For some, calling the Market Vectors Global Nuclear Energy ETF (NLR ) an infrastructure investment may sound strange. However, electricity in developed nations like France to underdeveloped countries like China rely (or will rely) heavily on nuclear energy. Suppliers of plant production expertise or uranium mining or anything to do with nuclear energy supply are well-represented by NLR. (Review 3 Reasons for a Rebound in Nuclear Energy .)

Its true companies in the iShares Global Materials Fund (MXI) can be found in other ETFs, including Market Vectors Steel (SLX) and Metals and Mining (XME). Yet MXI give a wide range of companies engaged in commodity-related manufacturing companies that ultimately determine the fate of infrastructure success worldwide. Of the infrastructure-related investments that Ive listed thus far, MXI is the most diverse. (Take a look at Global Materials ETF: Using the Pullback as a Buying Opportunity .

Disclosure Statement: ETF Expert is a web log (blog) that makes the world of ETFs easier to understand. Pacific Park Financial, Inc. . a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.

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