Yahoo Finance 4 Sector ETFs to Make the Most of Infrastructure Bill
On Nov 5, in a majority voting of 228-206, the House of Representative passed a $1.2 trillion bipartisan infrastructure bill. The bill was cleared by the Senate in August. This would put $550 billion of new funding into transportation projects, the utility grid and broadband.
Inside Infrastructure Plan
The infrastructure bill of $550 billion in addition to the previously approved funds of $450 billion for five years is a tailwind for the U.S. economic growth. The 2,702-page legislation is aimed at establishing the United States with the world's best economic infrastructure.
The infrastructure bill provides $100 billion toward roads, bridges and other major projects. The plan allocates $39 billion to modernize public transit and improve access for disabled people. In addition, the bill has assigned $66 billion for passenger and freight rail, $15 billion for electric vehicles and buses, and $17 billion for airports, ports and waterways.
The bill will invest $50 billion and $55 billion in water infrastructure and clean water projects, respectively. Moreover, $65 billion will be invested in high-speed Internet (broadband), $21 billion in environmental clean-up and $73 billion in Power infrastructure.
No wonder, the passage of the infrastructure bill is expected to benefit the U.S. economy in various ways. Since the Dow Jones has exposure to industrial sector greatly, such a bill is helpful for the index. Against this backdrop, below we highlight a few sector ETFs that could gain ahead on the basis of the passage of the infrastructure bill.
Sector ETFs to Benefit
Infrastructure
Since the bill is based on the U.S. infrastructure overhaul, the sector should boom undoubtedly. iShares U.S. Infrastructure ETF IFRA, ProShares DJ Brookfield Global Infrastructure ETF TOLZ and Global X U.S. Infrastructure Development ETF PAVE have been among the top picks here.
Industrials
The Zacks Rank #1 (Strong Buy) Industrial Select Sector SPDR ETF XLI will likely gain ahead as the infrastructure bill will boost industrial activities in the country. Along with large-cap construction companies, small-caps should benefit also. Specializing in asphalt and highway construction, Walton’s company, like many other small businesses, is well-positioned to cash in on federal projects, if we go by a CNBC article. Invesco S&P SmallCap Industrials ETF PSCI should thus be a beneficiary of the bill.
Materials
Infrastructure and industrial activities will definitely require materials and thus the sector will emerge as yet another beneficiary. Plus, higher pent-up demand and an improving labor market should boost the inflationary pressure and increase the price of materials. Materials Select Sector SPDR ETF XLB should thus be closely-watched for gains.
Energy
Demand for oil should be higher if the economic and industrial activities perk up. The ongoing global power crisis has made the space even more lucrative. So, one can have faith in Zacks Rank #3 (Hold) Energy Select Sector SPDR ETF XLE.
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Energy Select Sector SPDR ETF (XLE): ETF Research Reports
Materials Select Sector SPDR ETF (XLB): ETF Research Reports
Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
ProShares DJ Brookfield Global Infrastructure ETF (TOLZ): ETF Research Reports
Invesco S&P SmallCap Industrials ETF (PSCI): ETF Research Reports
iShares U.S. Infrastructure ETF (IFRA): ETF Research Reports
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