ETFs Aim at Same Target With Varied Results

Both funds provide exposure to infrastructure, but target different parts of the theme. As markets were falling early in the bear market, the SPDR fund (utilities) held up better than the PowerShares fund, which has outperformed in recent months.

This situation isn't uncommon among ETFs that focus on individual countries or industries. For example, the iShares MSCI Brazil Index Fund(EWZ) and the Market Vectors Brazil Small-Cap ETF(BRF) offer exposure to the South American nation, but the Market Vectors fund invests heavily in small, consumer discretionary stocks. That strategy has helped it gain 22% in the past three months. The iShares fund, which buys large companies and natural resources stocks, has advanced 1% during that period.

In the case of the infrastructure ETFs, one isn't better than the other. They can both play important roles in any diversified portfolio. However, it's important to understand that the SPDR ETF acts more like a global utility fund. In fact, its performance correlates more closely with that of the iShares S&P Global Utilities ETF(JXI) than the PowerShares fund, according to the SPDR Correlation Tracker Tool. The PowerShares fund correlates more closely with the iShares S&P Global Materials ETF(MXI).

Anyone who bought the SPDR FTSE/Macquarie Global Infrastructure 100 ETF thinking it would outperform the market, probably didn't understand the fund. They probably never looked at what the fund owned. Too many people make this mistake.

-- Reported by Roger Nusbaum.

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