'Thematic' Investing vs Benchmark S&P 500

PowerShares put out a marketing piece suggesting its Dynamic Building and Construction Portfolio(PKB Quote) could be an investment proxy for the infrastructure theme. Thematic investing could become very important over the next decade. Broad-based indexes like the S&P 500 have been skewed by sector distortions, first caused by the technology sector earlier in the decade and now the meltdown in the financial industry that could be years away from healing.

If broad-based indexes won't work as they should, then themes would be a logical place to seek out positive returns. Infrastructure seems like a logical theme based on needs in foreign countries and the move afoot in the U.S. to commit resources to projects as part of the stimulus plan. Regardless of your politics or ideology, it seems pretty clear that money is going to be spent on infrastructure and companies in industry would seem poised to benefit.

Based on its name, PKB would seem to fit right into the theme. It holds builders of infrastructure projects, like Mastec(MTZ Quote) and Fluor(FLR Quote), engineers such as Jacobs Engineering(JEC Quote) and AECOM Technology, and earth movers including Caterpillar(CAT Quote). Those are names one would expect to see in an infrastructure fund. In addition, Home Depot(HD Quote), Lowe's(LOW Quote) and Tractor Supply(TSCO Quote) also feature prominently in the fund, making up 13% of assets. ...