3 Infrastructure ETFs to Harness the Spending Boom

President Joe Biden has signed a $1.2 trillion infrastructure bill into law. These infrastructure ETFs should benefit as a result.

Construction workers
(Image credit: Getty Images)

A massive overhaul of the nation's infrastructure has finally been set into motion.

President Joe Biden's $2.25 trillion American Jobs Plan didn't have the legs to make it through Congress. However, the Senate and the House finally passed a $1.2 trillion compromise – dubbed the Infrastructure Investment and Jobs Act – which the president has recently signed into law.

Investors looking for ways to capitalize on this new law might want to set their own sights on infrastructure ETFs, which could benefit from this historic spending initiative.

"This legislation marks the largest federal investment in infrastructure in over a decade," says Jefferies Equity Research. "The IIJA contains $550 billion in new spending, including $110 billion intended for roads, bridges and other major projects, $40 billion for bridge repairs/replacement, $39 billion for modernizing public transit, $66 billion for Amtrak/rail, $65 billion for power grid upgrades, $65 billion for broadband, $55 billion for drinking water, $50 billion for climate resilience, $25 billion for airport repairs, $21 billion for environmental remediation, $11 billion for transportation safety, $7.5 billion for EV charging stations and $5 billion for school buses."

To be clear, it's important for investors to understand that when you're talking about infrastructure stocks, you're not talking about a single sector in itself. It's a general term referring to a combination of systems related to a business, nation or region. You'll actually find numerous sectors within infrastructure ETFs, including industrials, basic materials, energy and communication services.

"Infrastructure spending will impact many companies, providing cross-sector thematic ETFs with an opportunity to shine," says Todd Rosenbluth, Head of ETF & Mutual Fund Research for independent research outfit CFRA.

Today, we'll take a look at three of the largest infrastructure ETFs on the market that could get a boost from the Infrastructure Investment and Jobs Act. All of these are ETFs that Rosenbluth likes for potential growth opportunities both in the U.S. and around the globe.

Data is as of Nov. 15. Yields represent the trailing 12-month yield, which is a standard measure for equity funds.

Kent Thune
Contributing Writer, Kiplinger.com

Kent Thune, CFP, is a financial professional that helps individuals and businesses achieve their goals through a variety of delivery methods, including investment advice, financial planning and writing.