In this weekend's video I did a brief recap of my time with the Macquarie Infrastructure Trust (MIC) and what has happened with a couple of their CEFs in this bear market.
A reader asked how should the infrastructure theme be accessed given how badly the Macquarie products have done. The reader presumes that the theme is worth allocating to and I agree.
There are several ETFs but they each target different areas within the space. The SPDR FTSE/Macquarie Global Infrastructure 100 ETF (GII) is 90% utilities and so tracks closely with that sector. The PowerShares Emerging Markets Infrastructure Portfolio (PXR) is 40% materials and perhaps confusingly has non emerging market stocks in it (a company that sells to emerging market countries can be included). The iShares S&P Global Infrastructure Index ETF (IGF) is mostly an even mix of industrials and utilities with a little pipeline thrown in. Included in IGF are some of the cash flow segments like toll roads and airports. I use IGF in some portfolios.
IGF is down a lot, but less in the trailing twelve months than the Industrial Sector SPDR (XLI).
One way to buy in, but not what I am doing or will do in the future, would be to use GII as a proxy for utilities, PXR for materials and IGF for industrials (IGF has tracked much closer to industrials than utilities). All three funds track their corresponding sectors closely enough that I think they are suitable sector proxies with the hope of outperforming whenever the theme starts to matter.
I think of this as something to unfold over most of a decade like emerging markets were in the oughts (or if you prefer the naughties). In looking ahead like that I believe that the theme will be best captured by including individual stocks into whatever you do. IGF and PXR include a lot of stocks that will build the roads or provide the technology needed for any sort of project but they aren't that heavy in the cashflows that the engineers and systems company will be creating. Actually IGF has about 25% in these stocks. For now, building the stuff is probably more important than the cashflow from the finished product but that will not always be the case.
Just a couple of thoughts about the tourney. There were some great games, especially late Friday night, the Gonzaga/WKU game on Saturday and all three late games on Sunday but up to this point there seems to be fewer great games. Does anyone else think Bill Raftery and Vern Lundquist should be the network's announcing varsity instead of Jim Nantz and Clark Kellog? While I am biased here, Nantz and Kellog are like dry toast.
Finally news from Walker; there is a movie shoot in the house three doors down from us. They have been in pre-production there for a couple of days, including an electrician coming out the other day. A friend who knows about these things said with all of that it probably is not low budget, I have no idea. Joellyn asked one of the people what kind of movie and he said horror but Joellyn said that the way he said it made her think it was another genre if you, um, know what I mean.
