This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

New ETF Lets You Collect Highway Tolls

NEW YORK (TheStreet) -- Late in the emerging market equity boom of the last decade, infrastructure  drew attention for its investment potential. ETF providers now offer funds that invests in that theme. ProShares is the latest company into the space with the ProShares DJ Brookfield Global Infrastructure ETF (TOLZ).

This could make for a great investment.

Estimates for global infrastructure spending range into the trillions of dollars in places like India and Brazil. Plus, $3.6 trillion in infrastructure spending will be needed in the U.S. by 2020.

ProShares' infrastructure fund buys into companies from nine groups within the infrastructure industry, including master limited partnerships, and draws from developed and emerging markets.

TOLZ is limited to 50% in any one country, and that is its weighting to the U.S. That's followed by the UK and Canada at 11% each. None of the other countries has more than a mid-single percentage weighting in the fund.

Oil and gas storage and transportation dominates the fund at 31% of investment, followed by electricity transmission and distribution at 19%, MLPs at 18%, and six other groups with smaller weightings. By rule, MLPs cannot exceed 25% of the fund because above that level would complicate TOLZ's taxation on distributions. Despite the TOLZ symbol, publicly traded toll roads only account for 5.6% of the fund.

The fund's underlying index has 121 holdings. The largest holding is National Grid (NGG), a UK electricity transmission company at 7.9%.

Most of the world's need for infrastructure is in emerging markets, but less than 10% of the fund is in emerging market stocks. Of course, U.S. companies still sell into emerging markets. TOLZ won't be a proxy for emerging, but it may be a beneficiary of infrastructure trends in those markets.

Yield is the fund's primary focus. The three largest groups in the fund tend to be where investors look for income. ProShares reports that the underlying index yields 3.88%, which after accounting for the fund's 0.45% expense ratio could put TOLZ's yield at 3.43%. As is the case with all ETFs, dividends may vary.

The TOLZ fund focuses more on cash flow generators within the infrastructure field: transmission and pipeline companies, toll roads, airports and sea ports.

These are all important quality of life segments which should make TOLZ less cyclically sensitive than some other infrastructure funds. PowerShares Emerging Markets Infrastructure Portfolio (PXR),  allocates 43% to materials sector stocks further upstream in infrastructure.  This fund focuses on companies that provide the natural resources to build pipelines, electric lines and paved roads -- in other words, PXR invests in the companies that sell supplies to the infrastructure companies owned by TOLZ.

Zooming out slightly: improving and modernizing the world's infrastructure is going to happen. While there is no guarantee of investment success, the multi-trillion dollar need creates a strong tailwind.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,312.46 +46.47 0.27%
S&P 500 2,012.59 +1.23 0.06%
NASDAQ 4,580.2880 -13.1370 -0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs