Betting on infrastructure with ETFs

Core Insights - Infrastructure spending is currently a key driver of growth trends in global equities, with a focus on digital infrastructure providers like Equinix Inc. [1] - Infrastructure stocks are modestly priced compared to historical levels, despite typically trading at a premium to global equities [2] - Current valuations present an attractive entry point for investors seeking long-duration, cash-generative assets [3] Infrastructure Market Overview - There are 16 Canadian-listed infrastructure funds with combined assets of approximately $2.7 billion, with the largest being the $1.1 billion iShares Global Infrastructure Index ETF [3] - Infrastructure assets have historically provided attractive risk-adjusted returns, making them appealing during various economic conditions [4] Economic Impact on Infrastructure - Infrastructure spending is essential during economic growth and is a preferred vehicle for stimulating economies during downturns [5] - Major trends impacting infrastructure include the shift towards renewable energy and technological innovations like AI [6] Performance Metrics - Utilities are experiencing earnings-per-share growth rates exceeding 10% annually, indicating strong sector performance [7] - U.S. companies dominate infrastructure fund allocations, with 69% of the BMO Global Infrastructure Index ETF's assets in U.S. stocks [8] Investment Strategies - Active managers seek a balance between traditional dividend payers and newer growth opportunities in infrastructure [10] - The Brompton Global Infrastructure ETF has a diversified allocation, with 43% in industrials, 20% in energy, and 12% in utilities [11] Dividend Opportunities - Infrastructure funds offer above-average dividend payouts, with the Brompton ETF yielding 5.4% as of January [13] - The CI Global Infrastructure Fund provides a monthly distribution of 6.9 cents per share, translating to an annual yield of 2.6% [14] Stability and Growth - Infrastructure companies benefit from high barriers to entry and generate predictable cash flows supported by regulated pricing or long-term contracts [15] - Rising power demand and firm pricing are contributing to the growth of pipelines and utilities, particularly in relation to AI adoption [16]