A New Way to Invest in Infrastructure

Barclays(BCS Quote) has come out with a new exchange-traded fund, the iShares S&P Global Infrastructure Index Fund(IGF Quote), that is definitely worth considering.

Infrastructure is an asset class that has interested me for some time. I believe it is crucial that a diversified portfolio have some exposure to toll roads and airports around the world because they are likely to hold up well in a U.S. slowdown.

I have written about U.S.-listed Macquarie Infrastructure Trust (MIC Quote) several times in the last couple of years, touting it as my favorite product in the space, but IGF also seems compelling.

It's probably a better way to invest in the sector than another ETF that debuted recently, the SPDR FTSE/Macquarie Global Infrastructure 100 ETF (GII Quote).

I tend to think that infrastructure consists of two big sub groups. First, builders such as Foster Wheeler(FWLT Quote) offer a lot of growth potential, have a high correlation to the stock market and experience a lot of volatility. Second, "maintainers" (as in maintaining a way of life) such as Auckland Airport (AIA.NZ Quote) are steadier in price, have a low correlation to the stock market and usually offer some yield.

Utilities are often maintainers. GII is heavy weighted toward utilities, at 87%. By comparison, IGF takes a much more balanced approach, allocating 40% to utilities, 22% to highways and rails, 20% to energy storage and transportation (think pipelines), 10% to airports (a lot of airports around the world are listed on public markets) and 8.3% to public ports.