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Top 10 Global Building Infrastructure ETFs

Our goal in this profile is to help investors wade through the many competing ETF offerings available. Using our long experience as an ETF publication, and nearly 40 years in the investment business, we can help select those ETFs that matter and may or may not be repetitive. The result is a more manageable list of issues from which to view and make selections.

There aren't that many ETF choices in the sector so we've lumped homebuilding, construction and infrastructure issues together. Certainly, in emerging markets there is much activity planned. Given current economic conditions in the developed world, infrastructure projects can be seen as stimulative to economic growth.

We're not ranking these ETFs favoring one over another so don't let the listing order mislead you. Although we may use some of these in ETF Digest portfolios it's not our intention to recommend one over another.

Our technical analysis methodology involves using, where possible, monthly charts with enough data to allow investors to stay on the right side of the 12 month moving averages. Further, when market prices move too far above or below this moving average investors can assume a correction in the other direction will eventually take place. In this regard caution is advised.

XHB (SPDR Homebuilders ETF) follows the S&P Homebuilders Select Industry Index which represents the homebuilding sub-industry portion of the S&P TMI and is an equal weighted index. The fund was launched in June 2006. The expense ratio is .35%. AUM (Assets under Management) equal $590 million and average daily trading volume is 4.1M shares. As of mid August 2011 the annual dividend was $.24 making the current yield 1.90% and YTD return of negative 15%.

 

Data as of August 2011

XHB Top Ten Holdings & Weightings

1.      Tempur-Pedic International, Inc. (TPX):  4.58%

2.      Bed Bath & Beyond, Inc. (BBBY):  4.10%

3.      DR Horton Inc (DHI):  4.09%

4.      Lennar Corporation (LEN):  3.93%

5.      Home Depot, Inc. (HD):  3.87%

6.      Williams-Sonoma, Inc. (WSM):  3.77%

7.      Toll Brothers Inc (TOL):  3.75%

8.      Pier 1 Imports, Inc. (PIR):  3.71%

9.      PulteGroup Inc (PHM):  3.68%

10.  Owens-Corning, Inc. (OC):  3.67%

 

 

ITB (iShares U.S. Home Construction ETF) follows the Dow Jones U.S. Select Home Construction Index which is a weighted index as opposed to XHB's equal weightings. The fund was launched in May 2006. The expense ratio is .48%. AUM equal $385 million and average daily trading volume is less than 700K shares. As of mid-August 2011 the annual dividend was $.02 making the current yield .35% and YTD return of -21%.

Data as of August 2011

ITB Top Ten Holdings & Weightings

  1. NVR, Inc. (NVR):  9.81%
  2. DR Horton Inc (DHI):  9.10%
  3. Lennar Corporation (LEN):  7.91%
  4. Toll Brothers Inc (TOL):  7.86%
  5. PulteGroup Inc (PHM):   7.18%
  6. Home Depot, Inc. (HD):  4.76%
  7. Lowe's Companies Inc. (LOW):  4.09%
  8. M.D.C. Holdings, Inc. (MDC):  4.07%
  9. Sherwin-Williams Company (SHW):  3.66%
  10. Ryland Group, Inc. (RYL):  3.41%

 

FLM (First Trust Global Engineering & Construction ETF) follows the ISE Global Engineering and Construction Index which targets companies engaged in large civil and capital projects including utilities, transportation, telecommunications, commercial, residential and infrastructure. The fund was launched in October 2008. The expense ratio is .70%. AUM equal $42 million and average daily trading volume is less than 13K shares. As of early August 2011 the annual dividend was negligible and YTD return was -16%.

Data as of August 2011

FLM Top Ten Holdings & Weightings

  1. Vinci (DG):  2.86%
  2. Fluor Corporation (FLR):  2.76%
  3. Acs,Actividades de Const.y Servicios S.A (ACS):  2.70%
  4. KBR, Inc. (KBR):  2.62%
  5. Jacobs Engineering Group (JEC):  2.60%
  6. Bouygues (EN):  2.60%
  7. McDermott International Inc (MDR):  2.52%
  8. JGC Corp. (1963):  2.48%
  9. Skanska AB (SKA B):  2.39%
  10. Chicago Bridge & Iron Company (CBI):  2.39%

 

PKB (PowerShares Building & Construction ETF) follows the dynamic Building & Construction Intellidex Index which is an "enhanced" index designed to provide capital appreciation by evaluating companies based on fundamental growth investment timeliness, valuations and risk factors. The fund was launched in October 2005. The expense ratio is .60%. AUM equal $26.5 million and average trading volume is 14K shares. As of early August 2011 the annual dividend was $.78 making the current yield 7.10% which may include special factors. The YTD return was -15.30%.

Data as of August 2011

PKB Top Ten Holdings & Weightings

  1. Tractor Supply (TSCO): 5.45%
  2. KBR, Inc. (KBR): 5.18%
  3. Home Depot, Inc. (HD): 5.12%
  4. Vulcan Materials Company (VMC): 4.96%
  5. NVR, Inc. (NVR): 4.96%
  6. Fluor Corporation (FLR): 4.84%
  7. Martin Marietta Materials (MLM): 4.84%
  8. Mohawk Industries, Inc. (MHK): 4.63%
  9. Cascade Corporation (CASC): 3.30%
  10. Texas Industries Inc (TXI): 2.92%

 

IGF (iShares Global Infrastructure ETF) follows the S&P Global Infrastructure Index. The fund was launched in December 2007. The expense ratio is .48%. AUM equal $460 million and average daily trading volume is less than 60K shares. As of early August 2011 the annual dividend was $.76 making the current yield 2.40% and YTD return -5.30%.

Data as of August 2011

IGF Top Ten Holdings & Weightings

  1. TransCanada Corporation (TRP): 4.86%
  2. Transurban Group (TCL): 4.52%
  3. Enbridge, Inc. (ENB): 4.27%
  4. E.ON Aktiengesellschaft (EOAN): 3.80%
  5. Abertis Infraestructuras SA (ABE): 3.53%
  6. Atlantia (ATL): 3.26%
  7. GDF Suez (GSZ): 3.21%
  8. The Williams Cos Inc (WMB): 3.07%
  9. Spectra Energy Corp (SE): 2.89%
  10. Groupe Eurotunnel SA (GET): 2.68%

 

PXR (PowerShares Emerging Markets Infrastructure ETF) follows the S-Network Emerging Infrastructure Builders Index which includes construction and engineering, machinery, materials, heavy electrical equipment, mining and industrial machinery and steel. The fund was launched in October 2008. The expense ratio is .75%. AUM equal $190 million and average daily trading volume is 35K shares. As of early August 2011 the annual dividend was $.34 making the current yield .88% and YTD return -15%.

Data as of August 2011

PXR Top Ten Holdings & Weightings

  1. Anhui Conch Cement Company Limited (00914): 3.74%
  2. Caterpillar Inc (CAT): 3.44%
  3. Vale S.A. ADR (VALE): 3.25%
  4. ABB, Ltd. (ABBN): 3.20%
  5. Taiwan Cement Corp. (1101): 2.90%
  6. Larsen & Toubro Limited (LTOD): 2.86%
  7. Jiangxi Copper Company Limited (00358): 2.84%
  8. MMC Norilsk Nickel ADR (NILSY): 2.77%
  9. Atlas Copco (ATCO A): 2.42%
  10. Murray And Roberts Holdings Limited (MUR): 2.36%

 

EMIF (iShares Emerging Markets Infrastructure ETF) follows the S&P Emerging Markets Infrastructure Index. The fund was launched in June 2009. The expense ratio is .75%. AUM equal $122 million and average daily trading volume is less than 20K shares. As of early August 2011 the annual dividend was $.11 making the current yield .95% and YTD return -11%.

 

Data as of August 2011

EMIF Top Ten Holdings & Weightings

  1. Ultrapar Participacoes SA ADR (UGP): 15.22%
  2. Energy Company of Minas Gerais ADR (CIG): 7.69%
  3. China Merchants Holdings (International) Co., Ltd. (00144): 6.80%
  4. Cez A.S., Praha: 6.50%
  5. CPFL Energy SA ADR (CPL): 5.10%
  6. China Oilfield Services Limited (02883): 5.01%
  7. Cosco Pacific Ltd. (01199): 4.46%
  8. iShares MSCI Malaysia Index: 4.10%
  9. Korea Electric Power Corp ADR (KEP): 3.96%
  10. PT Perusahaan Gas Negara (Persero) TBK: 3.89%

 

BRXX (EG Shares Brazil Infrastructure ETF) follows the INDXX Brazil Infrastructure Index which consists of the 30 leading companies that INDXX, LLC deems to represent the infrastructure sector in Brazil. The fund was launched in February 2010. The expense ratio is .85%. AUM equal $70 million and average daily trading volume is less than 35K shares. As of early August 2011 the annual dividend was $.31 making the current yield 1.55% and YTD return of -9%.

It's worth noting that EG shares also have launched the China Infrastructure ETF (CHXX) following a similar index with the same expense ratios and similar performance. We've chosen Brazil only because we have a number of China sections to feature.

 

 

GII (SPDR GI 100 ETF) follows the Macquarie Global Infrastructure 100 Index which was created by FTSE to include companies in the infrastructure management, ownership of assets there to include utilities. The fund was launched in January 2007. The expense ratio is .59%. AUM equal $37 million and average daily trading volume is less than 5K shares. As of early August 2011 the annual dividend was $.69 making the current yield1.90% and YTD -6%.

 

Data as of August 2011

GII Top Ten Holdings & Weightings

  1. GDF Suez (GSZ): 4.79%
  2. E.ON Aktiengesellschaft (EOAN): 4.55%
  3. Enel Societa Per Azioni (ENEL): 3.50%
  4. Iberdrola, S.A. (IBE): 3.14%
  5. National Grid PLC (NG.): 2.99%
  6. Southern Co (SO): 2.90%
  7. TransCanada Corporation (TRP): 2.54%
  8. Exelon Corp (EXC): 2.51%
  9. Dominion Resources Inc (D): 2.44%
  10. Centrica PLC (CPYYF): 2.25%

 

INXX (EG Shares India Infrastructure ETF) follows the Indxx India Infrastructure Index which covers the 30 top companies that Indxx determines to be representative of India's infrastructure industries. The fund was launched in November 2010. AUM equal $74 million and average daily volume is less than 20K shares. As of early August 2011 there has been no annual dividend and YTD return is -18.70%.

Data as of August 2011

INXX Top Ten Holdings & Weightings

  1. Bharti Airtel Ltd. (BHARTIARTL): 7.20%
  2. Idea Cellular Ltd. (IDEA): 5.81%
  3. Tata Power Co., Ltd. (TATAPOWER): 5.79%
  4. GAIL India Ltd. (GAIL): 5.74%
  5. Sterlite Industries (India), Ltd. (STER): 5.66%
  6. NTPC Ltd. (NTPC): 5.20%
  7. Tata Motors, Ltd. (TATAMOTORS): 5.16%
  8. Larsen & Toubro Limited (LT): 5.11%
  9. Siemens Ltd. (SIEMENS): 5.03%
  10. Bharat Heavy Electricals Ltd. (BHEL): 4.42%

 

The world -- both in emerging and developed markets--  always needs to spend money on infrastructure improvements. Many governments believe these types of projects can stimulate economic growth. But the track record on the effectiveness of such a policy is mixed. Japan, for example, tried to stimulate growth with massive infrastructure improvements during its post-bubble period in the 1990s with little effect. In the U.S., the current administration argues for much the same remedy and so far the results are poor.

Clearly emerging markets need these improvements given their more rapid economic ascent into developed status with infrastructure improvements lagging behind.

For further information about portfolio structures using this or other ETFs see www.etfdigest.com.

You may address any feedback to: feedback@etfdigest.com  

 

(Source for holding data is from ETF Database and from various sponsors.)

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.

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