Global X Funds, begun trading a new US Infrastructure Development ETF, the Global X U.S. Infrastructure Development ETF (Bats: PAVE), on Wednesday, March 8, 2017. Here is a synopsis of the new ETF:
|Symbol: PAVE||Exchange: BATS|
|Name: Global X U.S. Infrastructure Development ETF||Net Expense Ratio: 0.47%|
The Global X U.S. Infrastructure Development ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx U.S. Infrastructure Development Index.
The Indxx U.S. Infrastructure Development Index is designed to measure the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment, as defined by Indxx, LLC, (Index Provider).
The eligible universe of the Underlying Index includes the most liquid and investable companies in accordance with the standard market capitalization and liquidity criteria associated with developed markets, as defined by the Index Provider. As of March 1, 2017, companies must have a minimum market capitalization of $300 million and a minimum average daily turnover for the last 6 months greater than or equal to $1 million in order to be eligible for inclusion in the Underlying Index. The Underlying Index only includes companies listed in the United States.
From the eligible universe, the Index Provider identifies U.S. Infrastructure Development Companies by applying a proprietary analysis that consists of two primary components: theme identification and company analysis. As part of the theme identification process, the Index Provider analyzes industry reports, investment research and spending trends related to infrastructure development in order to establish the themes that are expected to provide the most exposure to increased investment in U.S. infrastructure. As of March 1, 2017, the Index Provider has identified the following 4 U.S. infrastructure development themes:
(1) construction and engineering services,
(2) infrastructure raw materials, composites and products,
(3) construction equipment producers/distributors, and
(4) industrial transportation.
In the second step of the process, companies are analyzed based on 2 primary criteria: revenue exposure and primary business operations. A company is eligible for inclusion in the Underlying Index if:
(i) according to a public filing, it generates a majority of its revenue from one of the U.S. Infrastructure Development Themes, or
(ii) it has stated its primary business to be in products and services focused on one of the U.S. Infrastructure Development Themes.
Furthermore, only companies that generate greater than 50% of revenues from the U.S. as of the index selection date are eligible for inclusion in the Underlying Index. Accordingly, the Fund assets will be concentrated (that is, it will hold 25% or more of its total assets) in companies that provide exposure to U.S. infrastructure development.
The Underlying Index is weighted according to a modified capitalization weighting methodology and is reconstituted and rebalanced annually. At the annual rebalance, a capping methodology is applied to reduce concentration in individual securities and increase diversification of the Underlying Index. The Underlying Index may include large-, mid- or small-capitalization companies, and components primarily include industrials and materials companies. The Fund’s investment objective and Underlying Index may be changed without shareholder approval.
The Fund concentrates its investments (i.e., holds 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated. As of March 1, 2017, the Underlying Index was concentrated in the Industrials and Materials sectors.
Index Top Holdings (02/22/17):
|Emerson Electric Co||3.08%|
|Norfolk Southern Corp||3.06%|
|Union Pacific Corp||2.99%|
|Rockwell Automation Inc||2.99%|
|Eaton Corp Plc||2.96%|
|United Rentals Inc||2.82%|
Index Industry Breakdown (02/22/17):
|Electrical Components & Equipment||14.13%|
|Construction & Engineering||12.97%|
|Trading Companies & Distributors||10.99%|
|Construction Machinery & Heavy Trucks||2.83%|
PAVE Home Page
Here is a comment from Jay Jacobs, director of research at Global X:
“In the past few years, we’ve seen the national discourse coming to a bipartisan agreement that the United States needs to heavily invest in rebuilding our national infrastructure. Many strategies, however, are focused on providing exposure to existing infrastructure assets, rather than the companies that should be heavily relied upon to maintain, update, and build new infrastructure projects. Our focus has always been on bringing products to market that offer investors access to untapped market segments, and PAVE is a continuation of this goal.”