Different Types Of Infrastructure Funds and Infrastructure ETF: Options, Futures, Derivatives & Commodity Trading

Different Types Of Infrastructure Funds and Infrastructure ETF

Continuing further from our previous article Introduction to Infrastructure Funds and ETF, here are the details about different types of Infra Funds
In the core of each fund or ETF, there lies a selective investment strategy or theory, based upon which the fund manager decides to select stocks for investing the money collected from the fund investors. In case of Infrastructure funds, as we've seen that the sub-sectors can be quite varying, one needs to understand the differences between the various sub-sectors so as to really know where his invested money is going in the name of infrastructure fund investments. In this article, we list The various types of infrastructure funds based upon the sectors of investments
Here are the broad categories in which the various infrastructure funds available in the market can be categorized:

1) Utilities based Infrastructure funds:
These kind of infrastructure funds are the ones which invest primarily in utility companies - i.e. they have a maximum or majority of weightage given to utility companies.
A typical example of such a utility focused infrastructure fund is SPDR FTSE/Macquarie Global Infrastructure 100 ETF (GII) which is having majority in Utilities. (Image sourced from official GII site of spdrs.com).
Infrastructure ETF

Approximately 85% of fund holdings are in the utilities space for the GII fund.
The benefit of such utility based Infrastructure funds is that they are not very volatile - i.e. when the markets go down, they don’t fall as much and when the markets go up, they don’t go up that often either. These might also qualify as a regular dividend paying funds which mean regular income for the investors of such Utilities based Infrastructure funds.

2) Industries based Infrastructure funds
These are the kinds of infrastructure funds which are having majority of exposure in industrial stocks. They may come in different flavors, like along with industrial stocks one may also find material stocks.
One such example is the PowerShares Emerging Markets Infrastructure Portfolio (PXR) from Invesco PowerShares. As can be seen with the recent allocation, this fund has almost 96% exposure to industries and material stocks. (Image sourced from official PXR site of invescopowershares.com).
Infrastructure ETF

Usually, such funds are more volatile as they may have somewhat similar volatility like commodities.

3) Geographical Location / Market based Infrastructure funds
Infrastructure word indicates growth and development, and usually that rhymes well with the so called developing countries or emerging economies of the world. And that forms the third category of investments for infrastructure funds.
Now it is nowhere implied that only developing countries or emerging economies will show growth in infrastructure. Even developed countries like USA and UK may see good returns from infrastructure investments directly or indirectly. Say for example the country Brazil is expected to make heavy investments in infrastructure development in their country and that will mean giving contracts for development and machinery procurement from big companies in USA like the Caterpillar which is the global leader in heavy machinery equipment. So even though the development of infrastructure is happening elsewhere, US based companies are going to get good business and income.
But there are still country / region / market specific infrastructure funds in offering like the EG Shares Brazil Infrastructure ETF (BRXX), EG Shares India Infrastructure ETF (NYSEArca: INXX) and EG Shares China Infrastructure ETF (NYSEArca: CHXX). So investors who are willing to take a shot at the returns from the so called emerging economies or BRIC countries can give a try through these infrastructure funds.
Please note that these region specific funds will have their own set of sector/sub-sector allocations based upon the fund objectives and themes.
Also note that country specific infra funds are prone to high volatility due to geo-political developments, news and other region specific factors. What may sound good points for Brazil may not be the same China, as the countries are completely different and have different governments and dependencies.

And if you think the above 3 broad categories are sufficient to cover the specific infra funds, then hold on as there is more to come. The recent filings by Global X, the New York-based exchange-traded fund firm is reported to have filed very specific categories of 5 infra funds whose names will tell it all:

- Global X FTSE Railroads ETF
- Global X FTSE Toll Roads & Ports ETF
- Global X Cement ETF
- Global X Advanced Materials ETF
- Global X Farmland & Timberland ETF
So right from toll-roads, railroads to farm and timber business, investors will have a wide variety to choose from in near future. Just ensure that you know where actually your money is getting invested.

Now that we know the various kinds of Infrastructure funds, its time to move on to the List of Infrastructure Funds
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