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Infrastructure Compensation With This ETF


With global infrastructure needs seen as immense and expectations in place that spending will surge to meet those needs, the infrastructure investment theme has received increased attention in recent years.

Going forward, the allure of infrastructure investing, which investors can easily engage in via exchange traded funds, could and should rise as governments around the world finally commit the capital necessary to upgraded dated and dangerous bridges, pipelines and roads.

“Reports show that hundreds of bridges and tunnels are over 100 years old in the US Northeast Corridor; in this heavily trafficked area, the power supply system dates from the 1930s. Studies show that infrastructure improvement and repairs in countries around the globe will require trillions of dollars of investment. Demand for this sector is generally steady, since aging assets must be updated and replaced constantly,” writes Max Isaacman for Minyanville.

He highlighted ProShares DJ Brookfield Global Infrastructure ETF (TOLZ) , which debuted in March .

TOLZ “focuses on companies whose assets include airports, toll roads, ports, communications, electricity distribution, oil and gas storage and transport, and water in both developed and emerging markets. To be included in the index, companies must derive more than 70% of their cash flows from infrastructure assets. The index excludes companies that supply services such as construction and engineering to the infrastructure industry,” according to ProShares. [Global Reach With Infrastructure ETFs]

TOLZ is true to its global efforts, though the U.S. accounts for 51.1% of the ETF’s weight. Overall, 19 countries are represented in TOLZ, including three emerging markets. Those developing economies – China, Mexico and Brazil – combine for just 3% of the ETF’s weight.

TOLZ is not just a global or tactical bet. With a 30-day SEC yield of 4.58%, the ETF is a legitimate yield play as well. That fact is buttressed by a combined 16% weight to the U.K. and Australia, two of the best developed market dividend destinations after the U.S. [Attractive Australian Dividends]

Valuations on TOLZ are a tad high with a “trailing P/E ratio is a rather high 25 times; price/book is a lofty 2.53 times,” according to Minyanville. However, the fund has justified those numbers with a gain of 10% since its March debut.

ProShares DJ Brookfield Global Infrastructure ETF


ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.