Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

With A New Infrastructure Deal In The Works, 2 ETFs To Put On Your Radar

By Investing.com (Tezcan Gecgil/Investing.com )ETFsAug 06, 2021 10:14
uk.investing.com/analysis/with-a-new-infrastructure-deal-in-the-works-2-etfs-to-put-on-your-radar-200491516
With A New Infrastructure Deal In The Works, 2 ETFs To Put On Your Radar
By Investing.com (Tezcan Gecgil/Investing.com )   |  Aug 06, 2021 10:14
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

A new bipartisan infrastructure deal in the US might have the green light from the Senate soon. The initiative would cover transportation (i.e., roads, airports, ports and electric vehicle charging stations), broadband and utilities, including water systems and power.

According to a recent report by McKinsey:

“In 2015, the non-partisan Congressional Budget Office estimated that every dollar spent on infrastructure brought an economic benefit of up to $2.20. The US Council of Economic Advisers has calculated that $1 billion of transportation-infrastructure investment supports 13,000 jobs for a year. Beyond the numbers, infrastructure is critical to the health and well-being of the country.”

As infrastructure spending increases, a number of stocks are likely to benefit. Therefore, today we introduce two exchange-traded funds (ETFs) that give access to a diversified basket of infrastructure and clean energy businesses.

1. VanEck Vectors Steel ETF

Current Price: $63.40
52-Week Range: $29.47 - $68.22
Dividend Yield: 1.30%
Expense Ratio: 0.56% per year

The VanEck Vectors Steel ETF (NYSE:SLX) invests in businesses in the steel sector. The fund started trading in October 2006 and has around $191 million in assets.

SLX Weekly
SLX Weekly

Many industries worldwide rely on steel. Deloitte highlights these industries include: “the defense industry, transportation and heavy engineering, energy and construction (including aeronautical and shipping construction). Moreover, the iron and steel industry is closely related to the chemical industry and light industry.”

China is currently the top steel producer, followed by India, Japan and the US. On the demand side, China is the largest consumer of steel.

SLX, which has 26 holdings, tracks the returns of the NYSE Arca Steel Index. A third of the companies in the ETF come from the US. Next in line are Brazil (24.96%), Australia (14.68%) and the Netherlands (9.38%). The fund’s top 10 holding account for 73% of the fund.

Iron ore producer Vale (NYSE:VALE), miner Rio Tinto (LON:RIO) (NYSE:RIO), as well as steel and steel products manufacturers ArcelorMittal (NYSE:MT), Nucor (NYSE:NUE) and POSCO (NYSE:PKX) lead the names in SLX.

Over the past year, the fund is up about 122%, and hit a multi-year high in May. A large number of the companies in the fund are likely to benefit from demand for both infrastructure and automotive steel, not only from the US, but also from China and India. For buy-and-hold investors, a potential decline toward the $60 level would improve the margin of safety.

2. SPDR S&P Kensho Intelligent Structures ETF

Current Price: $46.26
52-Week Range: $30.96 - $49.00
Dividend Yield: 0.89%
Expense Ratio: 0.45% per year

The SPDR S&P Kensho Intelligent Structures (NYSE:SIMS) invests in innovative businesses that are involved in intelligent and connected infrastructure. These companies typically focus on smart buildings, smart power grids, intelligent water infrastructure and intelligent transportation infrastructure.

SIMS Weekly
SIMS Weekly

SIMS, which has 54 holdings, tracks the S&P Kensho Intelligent Infrastructure Index. The fund started trading in December 2017. In terms of sectors, we see electrical components and equipment (13.03%), followed by industrial machinery (11.66%) and building products (8.99%). The top 10 names comprise 26% of net assets of $51.7 million.

Leading names in the roster include Carrier Global (NYSE:CARR), which provides solutions for sustainable healthy buildings, heating, ventilation and air conditioning (HVAC), and commercial and transport refrigeration; technology group Silicon Laboratories (NASDAQ:SLAB), which builds semiconductors and software for industrial automation and Internet of Things (IoT) infrastructure; the UK-based Atlantica Sustainable Infrastructure (NASDAQ:AY), which provides renewable energy solutions; and provider of radio frequency systems Qorvo (NASDAQ:QRVO).

The ETF returned 41% in the past year, and saw an all-time high in June. We believe the fund could continue to power up investor portfolios in the near future as well. A potential decline toward $43 would improve the risk/return profile for long-term buyers.

With A New Infrastructure Deal In The Works, 2 ETFs To Put On Your Radar
 

Related Articles

With A New Infrastructure Deal In The Works, 2 ETFs To Put On Your Radar

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email