It's been six months since I
| Two of a Kind |
SPDR/FTSE Macquarie Global Infrastructure 100 ETF (GII) vs iShares S&P Global Utilities (JXI)
Looking at the chart below, one thing that really jumps out at me is that the NAVs of both closed-end funds got pounded in August -- at exactly the time one would hope for the low correlation benefit of an infrastructure fund to really kick in. Both NAVs also dipped along with the broader market during the decline in late February/early March as well. This doesn't dissuade me from having faith in infrastructure as an asset class. While there's evidence that it does not likely offer much shelter during a stock-market storm, I do think it would offer some help during a slow market decline. And those tend to be more serious, in terms of the impact on a portfolio, than short-term market disruptions. Part of the allure of this space is the potential to benefit from the build-up and -out of infrastructure in China, India and several other countries. If you look at the holdings of the Macquarie funds, you may notice they don't have much exposure to the companies doing the building, if any at all. Companies like Fluor ( FLR), ABB ( ABB) or Foster Wheeler ( FLWT) would probably bring more growth potential but also increase the funds' volatility. The fact that these funds don't have much presence in China and India is not necessarily a negative; it depends on what you are looking for. But this is an instance where it's important to know what your fund doesn't own, not just what it does own.
| Not Much Shelter In a Storm |
The holdings in Macquarie's two closed-end infrastructure funds sold off in February and August
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