As many nations sought refuge from the global economic crisis, infrastructure became an even more important theme as government's pledged billions of dollars towards construction in order to jumpstart stagnant economies. This new focus towards improving and building vital infrastructure has helped bring investment opportunities in this sector to the forefront. Funds like the SPDR FTSE/Macquarie Global Infrastructure 100 (NYSE:GII) have become popular with investors looking for access to the theme. However, despite the nearly $3 trillion already spent on infrastructure since the beginning of financial crisis, analysts calculate there is still more work to be done.

IN PICTURES: 10 Reasons To Add ETFs To Your Portfolio

More Work Needed
CIBC World Markets estimates total infrastructure spending over the next 20 years will need to reach nearly $35 trillion. In the United States alone, the American Society of Civil Engineers estimates that the nation will require $2.2 trillion in spending over the next five years to repair its dilapidated infrastructure. By 2030, electric utility investment needs could reach $1.5 trillion, and nearly $277 billion dollars will need to be spent to support our aging water distribution system.

Similar dollar amounts will need to be spent by other developed nations. The European Union must spend $252 billion; Japan, nearly $129 billion. In the United Kingdom, 30% of distributed water is lost through leakage and decaying pipes. These are just a few of the examples of serious dollar amounts needed to improve the developed world's degrading infrastructure.

In the emerging world, governments are spending comparable amounts of money on the building blocks of economic growth. Annual spending on logistic infrastructure, such as roads, ports and railways, has tripled in India since 2003 to nearly $30 billion. In 2009, China spent nearly $103 billion on railway construction, an increase of 69% compared with the previous year. The nation has plans to add 42,000 km of new rail tracks by 2020.

Similar developments are going on in Africa, where nations like Mozambique, Rwanda, Tanzania and Uganda all face critical infrastructure gaps, especially in the energy and transportation sectors. A new $32 billion plan was recently announced with the hopes of providing the integration of Africa's road infrastructure and linking its nine major trading corridors.

Doing the Heavy Lifting
Funds like the Cohen & Steers Infrastructure Fund (NYSE:UTF) generally hold the owners and operators of infrastructure assets. The global build-out lends itself to companies that provide the engineering and construction services to various governments and organizations. Investors wanting to participate in the build-out do have some choices.

For broad exposure to the build-out, both the PowerShares Emerging Markets Infrastructure (NYSE:PXR) and the First Trust ISE Global Engineering & Const Index (NYSE:FLM) track many companies involved in the heavy lifting. The PowerShares fund also includes a heavy dose of the materials companies that provide the steel and aggregate needed for construction. Both funds have performed pretty well in the recovery, with the PXR up 11% in the last six months.

Great Lakes Dredge & Dock Corporation (Nasdaq:GLDD) may be one of the best stealth infrastructure plays. The company maintains the shape of docks and ports as well as participates in their construction, both domestically and internationally. The company won more than 40% of the total bids for dredging in 2009 and its backlog currently sits at $363 million. Great Lakes will stand to profit as countries continue to improve their port infrastructure.

With a host of new nuclear of reactors under construction around world and host of others in the planning stages, both Fluor Corporation (NYSE:FLR) and Shaw Group (Nasdaq:SHAW) will benefit as the leading contractors in the space. India plans on adding 20 GW worth of nuclear power by 2022.

The Bottom Line
With the world beginning to take a serious look at the state of its infrastructure, many governments are plowing large dollar amounts in upgrading and improving these vital pieces of economic growth. Companies like URS (NYSE:URS) that do the construction benefit from the build-out. Investors with long enough timelines may want to consider adding some capital to the sector. (To learn more, see Build Your Portfolio With Infrastructure Investments.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Chart Advisor

    Gold Struggles to Climb Higher and May Fall Soon

    Traders will be watching the price of gold over the coming weeks. We'll take a look at how a couple major moving averages are suggesting that the next move could be lower.
  2. Mutual Funds & ETFs

    ETF Analysis: United States Brent Oil Fund

    Learn more about the United States Brent Oil exchange-traded fund, the characteristics of the fund and the suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Ultra Bloomberg Crude Oil

    Find out more about the ProShares Ultra Bloomberg Crude Oil ETF, the characteristics of UCO and the suitability and recommendations of UCO for investors.
  4. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
  5. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Hong Kong

    Learn about the iShares MSCI Hong Kong fund, which invests in various equities of companies listed on the Hong Kong Stock Exchange.
  7. Mutual Funds & ETFs

    ETF Analysis: Vanguard Small-Cap Growth

    Take a close look at the Vanguard Small-Cap Growth ETF, which focuses on domestic small-cap equities with a fundamental growth strategy.
  8. Mutual Funds & ETFs

    ETF Analysis: First Trust Dorsey Wright Focus 5

    Take a closer look at the First Trust Dorsey Wright Focus 5 ETF, a unique and innovative fund of funds based on momentum and relative strength.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares National AMT-Free Muni Bond

    Take an in-depth look at the iShares National AMT-Free Municipal Bond ETF, a highly diverse and very popular muni bond fund.
  10. Mutual Funds & ETFs

    Top 3 Switzerland ETFs

    Explore detailed analysis and information of the top three Swiss exchange-traded funds that offer exposure to the Swiss equities market.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  5. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  6. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. 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 >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. 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 >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. 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 >>

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!