The sector weightings show the extent to which infrastructure can be a multifaceted theme. FLM is 94% industrial stocks. For comparison, SPDR FTSE/Macquarie Global 100 ETF (GII) is 89% utilities and PXR, profiled last week, is 49% materials. Carrying the potential sector diversification out a little further, if there were a pure-play ETF of publicly traded stock and futures exchanges, it could be considered a financial infrastructure fund.
As if the almost vertical decline in the index this year weren't clear enough, the back-test statistics belie how volatile FLM could be. It has had a beta of 1.61 vs. 1.00 for the Russell 3000 Index and a standard deviation of 23.71 vs. 11.72 for that same index. Obviously, those stats give an idea at to why the outperformance was so great during the bull market and why the ensuing decline was almost as swift.
FLM: A Back Test
|Click here for larger image.|
The fund's future results hinge on two different things. First is the clear and obvious need to spend money on infrastructure. Even if the U.S.' economic problems are secular, for most of the world the current slowdown is likely to be cyclical, and so the money will be spent sooner or later.The other side of the coin for FLM is its country-weighting. Most of the fund allocates to the U.S., Japan and Western Europe; that's roughly 75% of the fund. The visibility for these regions over the next five years is murky at best. So will companies like Obayashi from Japan or Bouygues (EN) from France be able to swim upstream if those countries are struggling economically and the stock markets continue to struggle? So far, actually, they have been able to hold in reasonably well, but down 10% in a down-40% world could be difficult to maintain.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV