Best Infrastructure ETFs As Bipartisan Funding Prepares to Make Waves

By

Jul. 29 2021, Published 12:27 p.m. ET

The Senate has officially voted to push the bipartisan infrastructure bill through. The bill is slightly slimmer than the original, but it's still quite robust. That's $550 billion going into transportation, utilities, and broadband, the logistics of which will have to be determined by state and local governments depending on need.

Article continues below advertisement

If you're already thinking about infrastructure stocks that could benefit from this stimulus, you aren't alone. Here are the best infrastructure-oriented ETFs so you can get industry exposure without the risk of investing in individual stocks.

Moving ahead with deliberations on how the infrastructure bill will take flight

The Senate is pushing the infrastructure bill through for more tweaking, but it's a step in the right direction. No infrastructure bill was able to get off the ground during the Trump administration. Now, after six months, one of Biden's key implications is coming to fruition, even if it looks a lot different than he initially hoped.

Article continues below advertisement

What we do know is that state and local governments will see a big influx of opportunity for projects on roadways, broadband, and more.

The iShares U.S. Infrastructure ETF (IFRA) is an obvious target

The iShares U.S. Infrastructure ETF (IFRA) includes top holdings like Sunnova Energy International, American States Water, Duke Energy Corp., Edison International, Hawaiian Electric Industries Inc., and Public Service Enterprise Group.

Article continues below advertisement

IFRA covers the utilities and infrastructure bases, all with an expense ratio of 0.4 percent.

IFRA stock is up 21.97 percent YTD, with positive sentiment this week due to the infrastructure bill. A strategic entry point will help you compound your investment and hedge against volatility.

Article continues below advertisement

Look at the Global X U.S. Infrastructure Development ETF (PAVE)

Much like its ticker suggests, the Global X U.S. Infrastructure Development ETF (PAVE) covers companies that benefit from an influx of infrastructure activity, especially raw materials, heavy equipment, and engineering. PAVE's holdings include Trane Technologies, Deere & Co., Vulcan Materials Co., Rockwell Automation Inc., CSX Corp., and United Rentals Inc.

The expense ratio is 0.47 percent. PAVE stock is up 26.45 percent YTD, and this is another fund that will pose a tricky entrance point after the infrastructure bills finalize.

Article continues below advertisement

The SPDR S&P Transportation ETF (XTN) targets one key area of the infrastructure bill.

Part of the infrastructure bill's funding is reserved specifically for transportation, which just so happens to be the port of call for the SPDR S&P Transportation ETF (XTN). XTN's holdings include Amerco, Knight-Swift Transportation, Old Dominion Freight Line, Lyft, and J.B. Hunt Transport Services.

The expense ratio is the lowest of the bunch at 0.35 percent. XTN stock is up 20.43 percent YTD, and investors might want to get in quickly depending on market conditions at the time of trading.

Stay domestic for the most influence from the infrastructure bill

Many funds and stocks in the infrastructure space take a global perspective. However, the infrastructure bill only holds an American impact. With that said, you might want to keep that U.S. lens as you decide which infrastructure ETF to invest in. Geographically diverse investing is a smart move, but the infrastructure bill won't directly benefit stocks from other countries.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.