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Mutual Funds Show Weakness in Infrastructure

The collapse of a bridge in Minneapolis last week tragically punctuated years of warnings about deterioration of the nation's transportation infrastructure.

It now seems inevitable that there will be serious efforts to prevent future death and destruction. However, mutual fund investors wishing to participate in the rejuvenation of the U.S. highway system will find that they have few options.

Just as the condition of the nation's roads and bridges has been neglected by their keepers, mutual funds have generally neglected to invest in companies that are likely to be called upon the save the roadway system.

The accompanying table summarizes investment by funds in 10 selected companies that would likely supply the engineering, equipment, materials and construction work in the rebuilding of the nation's highway system:

  • Caterpillar (CAT)
  • Cemex (CX)
  • Chicago Bridge and Iron (CBI)
  • Fluor Corp. (FLR)
  • Granite Construction (GVA)
  • Hanson (HAN)
  • Jacobs Engineering Group (JEC)
  • Lafarge (LR)
  • NCI Building Systems (NCS)
  • URS Corp. (URS)

The list contains some large construction, engineering and materials firms that have historically been involved in transportation projects.

Although they are virtually certain to achieve benefits from the rebuilding effort, their diversified revenue bases mean that their bottom lines will not feel the full impact of the highway and bridge rejuvenation effort. So some smaller firms with total revenue more dependent entirely on transportation infrastructure were also included.

Funds With Exposure to Selected Transportation Infrastructure Stocks
Here are funds' holdings of these selected companies
Name, ticker and Ratings grade* No. % of Portfolio Value ($million) Year-to-date return (%) 12-mo. total return (%)
Open-End Funds
Transamerica Premier Balanced Inv (TBAIX) C- 3 10.2 40.1 6.101 12.281
DF Dent Premier Growth (DFDPX) B 3 8.8 10.0 10.641 16.181
Fidelity Select Constn & Housing (FSHOX) D- 5 8.8 13.8 -3.093 13.958
TA IDEX Transamerica Balanced A (IBALX) D+ 3 8.6 17.6 5.658 12.588
Muhlenkamp Fund (MUHLX) D+ 2 8.0 179.4 -2.639 6.371
Transamerica Premier Equity Inv (TEQUX) C- 2 8.0 54.5 6.039 14.663
Transamerica Premier Divers Eq Inv (TPVIX) C 2 7.7 17.0 8.221 17.555
HSBC Investor Growth & Income B (HSGBX) C 2 6.9 3.3 9 18.831
TA IDEX Transamerica Equity B (ITQBX) D+ 2 6.5 112.3 5.042 14.155
New River Core Equity Fund (NRVCX) C+ 2 6.5 0.5 4.669 15.081
ING Neuberger Berman Partn Portf S (INBSX) U 3 6.3 26.3 3.853 17.672
CGM Focus Fund (CGMFX) C+ 1 6.2 155.4 30.355 26.456
Oak Assoc-White Oak Select Gr Fd (WOGSX) E 1 6.1 26.0 12.74 26.548
BNY Hamilton Multi-Cap Equity Fd (BKMCX) C 2 5.9 3.7 3.072 10.544
Rydex Series-Sector Rotation C (RYISX) C+ 6 5.6 16.9 10.728 22.942
AIM Mid Cap Basic Value A (MDCAX) B 2 5.6 15.5 9.906 24.367
Brandywine Advisors (BWAFX) C+ 3 5.4 13.8 13.894 25.3
Neuberger Berman Partners Inv (NPRTX) B+ 3 5.3 233.5 4.477 18.514
Commonwealth-Real Estate Securities (CNREX) B 3 5.2 0.8 -5.169 8.563
JPMorgan Latin America A (JLTAX) U 1 5.2 56.8
Aston/Optimum Large Cap Opp Cl N (AOLCX) U 2 5.2 0.1 16.633
WesMark Small Company Growth (WMKSX) C- 1 5.1 2.1 8.437 17.204
New River Small Cap Fund (NRVSX) C+ 1 5.1 2.9 8.867 16.447
Closed-End Fund
Dow 30 Premium & Dividend Income (DPD) B- 1 5.1 11.6 0.56 13.31
Exchange-Traded Fund
PowerShares Dynamic Bldg & Cons (PKB) B 4 16.3 3.3 18.37 35.46
* "U" is unrated.
Source: Ratings (data as of 7/31/2007).

Only 23 open-end funds, one exchange-traded fund and a single closed-end fund hold cumulative positions of 5% or more in the 10 selected infrastructure companies.

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