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ETF Trends and Moneylife team up to bring you the ETF of the Week.
One Fund, on point for today, the expert to talk about it. This is the ETF of the week. Welcome to the ETF of the week where we get the latest take from Todd Rosenbluth, the head of research at Vettify. And if you go to Vettify dot com, you're gonna find all the tools you need to be a savvier, smarter ETF investor and to dig in and get more details on the new newsworthy trending and timely ETFs that we talk about here. Todd Rosenbluth, it is great to chat with you again.
Todd:I'm so glad to be back.
Chuck:Your ETF of the week is
Todd:The Global X US Infrastructure Development ETF, ticker PAVE, PAVE.
Chuck:PAVE, PAVE, the Global X US Infrastructure Development Fund. What's your thinking here, Todd? Why this fund this week?
Todd:Well, first of all, we're heading into July 4th, and so we're celebrating the US and celebrating US spending. We have certainly seen that in the last couple of years. Infrastructure spending has been a long time coming, but in the last couple of years, we've seen 450 plus $1,000,000,000 of money get spent by the US government to repair roads, bridges, to build up the infrastructure that was much maligned for a number of years. This is something that we think will survive and continue to see spending regardless of how the election comes out, and this ETF, PAVE, is uniquely positioned to benefit from these trends because of its diversified approach across the spectrum.
Chuck:Uniquely. That's an interesting word because there are plenty of infrastructure funds. Obviously, you could have picked them. You picked this one. What is so unique?
Todd:So what we like is that this is exposed to industrials and materials companies, but it's across the spectrum. So there are companies that are gonna benefit from the supply chain in order to help get things ready for infrastructure spending and then carry out that spending. And it's well diversified. This takes a research oriented approach to building the overall index. We like that.
Todd:It's relatively cheap. It's from a thematic ETF provider, Global X, that prides itself on offering this type of suite of products, and they do a lot of research to help you get up to speed on the underlying trends. In fact, it helped us to get up to speed. So we really think this Global X ETF is well positioned to benefit, and it's doing relatively well as of late.
Chuck:The uniqueness of this fund seems to show up in the idea that if you look at annualized performance, it's been basically at the top of its peer group in almost every calendar year since its first full one back in 2018. Whenever I see something and you go, oh, you look and you go, maybe there's a competitive edge, that's when I worry that it'll regress to the mean. You've obviously said this one seems to be better. So funds can stay at the top of the charts at the head of the peer group, or is it maybe a little different than those other funds in terms of do we need to think more that this has more risk or there's something so different about it that maybe it's miscategorized?
Todd:I think it possibly might not be categorized in a peer group that's broad enough. So this is a thematic oriented ETF that holds industrials and materials companies. So I don't know how it's classified in the data that you're using, but if it falls under a sector oriented group, then, of course, there's gonna be performance differences between one sector or another. And even if it's within industrials, because it's not necessarily the industrials you might think of, General Electric is the largest holding in the industrial select sector spider ETF, XLI, that you're not gonna find that within this ETF. You're gonna find companies that are tied to construction and materials.
Todd:You're gonna find companies that are helping to supply and provide the trucks. We think this is uniquely positioned, and we actually think about it from a bottom up perspective and how the companies inside are benefiting from the recent spending and the likely future spending that's gonna happen. And then also tied to that future spending is artificial intelligence is one of those key themes that many people are focused on right now. They tend to think about the technology sector, but we think AI is or and so do other people. AI is gonna lead to a lot more electricity spending.
Todd:This is an ETF that you get some exposure to that trend as well. So multifaceted thematic oriented ETF.
Chuck:Which raises another question. Normally, with a thematic ETF, you go, let's ride the theme as long as we can, but we don't necessarily think that most themes are permanent. But this, well, the infrastructure story is not going away. It might be impacted by things that happen in Washington, but the story's still gonna be there. The need's still gonna be there.
Chuck:So is this a permanent addition to a portfolio? And what is its role within that portfolio? Where does the money come from from somebody who's got a diversified portfolio to add this to their holdings?
Todd:When we in vetify hear from advisors about thematic strategies, they're likely using between 5 10% of their overall allocation of equities towards a thematic trend. And what they're doing is usually holding between 2 or 3 different themes for the intermediate term. So intermediate term to me is 3 years, And then they're revisiting that based on the fundamentals and whether or not it still makes sense to have within their portfolio. So we think this ETF, PAIM, could be a strategic allocation from a thematic perspective over the next couple of years for people who believe that that trend of infrastructure and infrastructure building in the United States is going to persist. We think it will.
Todd:Obviously, each investor has to decide if that makes sense. So this is still a small slice of the portfolio, but what we've seen is the assets have been building. We've seen net inflows for Pave thus far in 2024.
Chuck:It's Pave, the global ex US infrastructure development ETF. It's the ETF of the week from Todd Rosenbluth at Vedify. Todd, great stuff as always. See you again next week.
Todd:I'll see you next week, Chuck.
Chuck:The ETF of the week is a joint production of Vedify and Money Life with Chuck Jaffe. And, yep, you guessed it. That's me. And you can learn all about my hour long weekday show by going to money life show.com or by searching for it wherever you find great podcasts. And if you're searching for great information on exchange traded funds, look no further than Vettafy.com, where they have all the tools you need to be a better investor.
Chuck:They're on Twitter for x@vettah_fi, and Todd Rosenbouthe, their head of research, my guest. He's on there too at Todd Rosenboth. The ETF of the week is here for you every Thursday. Follow us on your favorite podcast app to make sure you don't miss an episode. We'll introduce you to another great ETF next week.
Chuck:And until then, happy investing, everybody.