The Infrastructure ETF Hype?

June 08, 2012




EM Last Year

All five of these developing world infrastructure funds are down in the past year, and INXX continues to lag its BRIC brethren.

It seems that the culmination of stimulus programs in the emerging world, combined with concerns over global growth, has wreaked havoc on these portfolios.

Less fiscal participation in the infrastructure market combined with less economic activity is calling into question the sustainability of this profitable trend for investors.

So while the case for global infrastructure has been made ad nauseum, the recent performance of ETFs targeting this theme calls into question the viability of the strategy moving forward.

For long-term investors, this may prove just a bump in the road or, better yet, a fantastic buying opportunity.

On the other hand, investors looking for shorter-term value in the space would do well to consider avoiding the theme until global economic stability returns.

With the European debt crisis gaining steam, Greece threatening to leave the eurozone and China so concerned about growth that it just cut rates, don’t hold your breath.

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