The pressing need to improve America’s infrastructure drove the Biden Administration to pass a bipartisan Infrastructure Law last fall, which has allocated significant funds to improve the country’s roads, rails, bridges, water, and broadband. This, combined with rising infrastructure activities in a reopening economy, should drive the infrastructure industry’s growth.
However, high inflation, a labor shortage, and deepening supply chain constraints have been of concern lately, with companies also grappling to deal with rising input costs of materials. But increasing investments in infrastructure projects should benefit companies in this space. Investors’ interest in infrastructure stocks is evident in the iShares Global Infrastructure ETF’s (IGF) 7.8% returns year-to-date versus the SPDR S&P 500 Trust ETF’s (SPY) 4.6% loss. The global construction market is expected to grow at a 10.8% CAGR to reach $22.87 trillion by 2026.
