Industry Updates

Infrastructure ETFs buoyed by Biden early-term spending

The American Jobs Plan is set to invest $932bn in roads, bridges, clean energy, water and digital infrastructure

Jamie Gordon


Infrastructure ETFs booked strong inflows last week as US President Joe Biden targeted considerable infrastructure investment within his American Jobs Plan. 

In Europe, the iShares Global Infrastructure UCITS ETF (INFR) saw $60m inflows in the week to 7 April, according to data from Ultumus while investors poured $50m into the SPDR Morningstar Multi-Asset Global Infrastructure UCITS ETF (ZPRI).

These flows cap off a positive first quarter for the ETFs with INFR pulling in $292m inflows year-to-date (YTD) while ZPRI booked $199m inflows over the same period. 

These trends are not surprising given infrastructure spending is a popular target for policymaking among new – and outgoing – presidents seeking momentum. 

The American Jobs Plan does cover areas outside of infrastructure, such as investments in care and manufacturing but its $2.3trn in new costs also touches on a broad range of infrastructure capabilities.  

These include pledges to invest $621bn in transport infrastructure, such as modernising 20,000 miles of roads, fixing more than 10,000 bridges, replacing thousands of buses and rail cars, repairing hundreds of stations, renewing airports, and expanding transit and rail services. 

It also discusses building, rehabilitating, and retrofitting more than two million homes, commercial buildings, hospitals, and schools for affordability, accessibility, and energy efficiency. 

Enjoying a more targeted exposure to Biden infrastructure spending, the US-listed Global X U.S. Infrastructure Development ETF (PAVE) has far outstripped its European counterparts YTD pulling in $1.6bn inflows, and 18.4% returns, versus the 6.9% and 5% returns offered by INFR and ZPRI, respectively. 

Andrew Little, research analyst at Global X, said: “Leading up to President Biden announcing the infrastructure-focused American Jobs Plan last week, [PAVE] benefitted from positive expectations around infrastructure set in the run-up to the election, as well as a more recent rotation from growth to value

“Now that the [American Jobs Plan] is articulated and legislation seems likely, we expect that infrastructure-related revenues will continue to bolster the ETF as they are realised.” 

Thematic strategies will also benefit from infrastructure spending plans with clean water ETFs such as the L&G Clean Water UCITS ETF (GLUG) in a strong position to be buoyed by pledges to invest $111bn to eliminate all lead pipes and service lines in the US, and modernise drinking water, wastewater, and stormwater systems. 

Energy transition products such as the iShares Global Clean Energy UCITS ETF (INRG) will also be lifted by $100bn being spent on tax credit incentives for the roll-out of renewable energy utilities and storage, and capping hundreds of thousands of orphan oil and gas wells and abandoned mines.

Finally, ETFs targeting the expansion of internet access such as the Digital Infrastructure and Connectivity UCITS ETF (DIGI) will benefit from $100bn being committed to increasing the speed and coverage of US broadband infrastructure as well as subsidies for access to high-speed internet. 

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