Despite the market decline, engineering projects have helped Bechtel deliver record revenue in 2007 and book new projects that could make 2008 even more profitable. Those people who are hoping that privately held nation-builder Bechtel will one day issue common shares to the public would be better off spending time evaluating the potential of new global engineering ETFs.

Investing in global engineering ETFs gives investors the option to invest in this growth using public companies. (If you're an investor who likes to understand how and why your investment products work, then read An Inside Look At ETF Construction.)

First Trust Infrastructure Fund
In October First Trust Advisors introduced the ISE Global Engineering and Construction Index Fund (NYSE:FLM). The majority of the fund's investments are in infrastructure companies located in Japan, France, the Netherlands and Spain. Approximately 25% of the fund's investments are in U.S. companies. U.S.-based companies among the fund's top-10 holdings include engineering firms URS Corp (NYSE:URS) and Fluor (NYSE:FLR) as of September 30, 2008.

InvescoPowerShares Infrastructure Fund
InvescoPowershares also introduced the Emerging Markets Infrastructure Portfolio (AMEX:PXR) in mid-October. While the FLM fund has a nearly 95% concentration in industrials as of September 30th, PXR is split with 55% of its investments in Industrials and 40% of its investments in materials. Familiar industrial holdings include Swiss-based automation technology firm ABB Ltd. (NYSE:ABB) and U.S. earth moving equipment supplier Caterpillar (NYSE:CAT). On the materials side, investors will be familiar with Brazilian miner Companhia Vale ADS (NYSE:RIO) and nickel miner Norilsk Nickel Mining & Metallurgical (OTC:NILSY).

Reason to Pay Attention
The International Monetary Fund expects the deceleration in the global economy to persist until sometime in 2009. The slowdown may make it difficult for construction and engineering firms to kick off new projects that don't already have financing lined up. However, in response to the economic difficulties, encouragement from banks to make sensible lending decisions could ultimately benefit infrastructure providers. For example, Bechtel has completed a high-speed rail transportation project in the U.K. and a nuclear energy project in the U.S. The two projects are examples of future infrastructure developments that could receive financing since both projects are aimed at improving the quality of life. One provides an alternative mode of transportation, while the other provides a non-petroleum based form of energy production.

Final Thoughts
The state of the world's economy may be in flux, but the upward trajectory of the world's population is intact. On a planet of approximately 6.7 billion people that is estimated to grow to 9 billion by 2042, we will need to build more bridges, roads and communication services. Infrastructure providers like Bechtel and its partners should be just fine in the long term.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: Vanguard Total World Stock

    Learn about the Vanguard Total World Stock exchange-traded fund, which invests in stocks located in numerous countries with a high level of diversification.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  3. Mutual Funds & ETFs

    ETF Analysis: BioShares Biotechnology Products

    Learn more about the BioShares Biotechnology Products fund, an exchange-traded fund that is focused on producers of FDA-approved drugs.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR EURO STOXX 50

    Learn about FEZ, the Euro Stoxx 50 ETF. FEZ tracks the 50 largest companies in Europe, making it the Dow Jones Industrial Average of Europe.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraShort Nasdaq Biotech

    Learn more about an innovative inverse-leveraged sector exchange-traded fund, or ETF, the ProShares UltraShort Nasdaq Biotechnology fund.
  6. Chart Advisor

    Value Stocks Offer Stability in a Volatile Market

    With volatility on the rise, investors are turning to segments of strength such as value stocks. We'll take a look at several ETFs that could be worth a closer look.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Market Vectors EM High Yield Bd

    Learn more about the Market Vectors Emerging Markets High Yield Bond ETF, a fund dedicated to subinvestment grade foreign debt issues.
  10. Mutual Funds & ETFs

    ETF Analysis: First Trust Tactical High Yield

    Find out more about the First Trust Tactical High Yield fund, a debt security-focused ETF designed to produce high income.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. Lion economies

    A nickname given to Africa's growing economies.
  6. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!