Obama’s Infrastructure Rally

As the Obama administration prepares the details behind a highly anticipated stimulus plan, investors are placing bets on sectors likely to benefit and infrastructure is among the favorites.

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The Wall Street Journal reports that the new administration will need to spend $20 billion a year above current levels on roads and highways just to maintain today’s levels of highway safety and traffic flow.  School building repairs, broadband expansion and energy efficiency spending on public buildings are also likely beneficiaries of the 2009 stimulus plan.

As speculation on post-election spending plans have picked up, so have stocks related to infrastructure including engineering and construction companies.

Up 32% in the past month, the Powershares Building and Construction Portfolio (PKB) is a fundamentally weighted fund that holds large engineering firms such as Jacobs Engineering (JEC) and Fluor (FLR) and construction equipment giant Caterpillar (CAT). About 25% of the fund is in companies related to residential construction and maintenance such as Mohawk Industries (MHK), Lowe’s (LOW) and Home Depot (HD).

Up 25% since November 19 is the S&P Global Infrastructure Index Fund (IGF).  Top holdings include European energy giant GDF Suez (GSZ), Spanish infrastructure manager Abertis (ABE) and Atlantia SPA(ATL), Italy’s largest toll motorway builder and operator.

See the ETF Directory for a complete listing of Sector ETFs.