Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How Global X US Infrastructure ETF Captures the Rebuilding Boom in 2026
Transcript
- Lucas: The S&P 500 hits a new high, the Dow crosses fifty-one thousand, and the NASDAQ is basically flat. But there's a pocket of the market that's quietly returned eighteen percent year-to-date, and most people aren't talking about it. Luna: Okay, that's a big gap. The S&P is up what, around six percent on the year? So this pocket is triple the market. Lucas: More than triple. I'm talking about the Global X US Infrastructure Development ETF, ticker symbol P-A-V-E. It's up eighteen percent year-to-date as of this week, and it's not a fluke. The catalyst is real, and it's flowing from a law that passed five years ago. Luna: The bipartisan infrastructure law from 2021. I remember people said it was too slow, too bureaucratic. But now we're in the thick of the spending wave. Lucas: Exactly. The Congressional Budget Office estimated the law would authorize about one point two trillion dollars over ten years. The first couple of years were slow — states had to plan, environmental reviews, all that. But by early 2026, we're in the construction sweet spot. The Department of Transportation announced it's obligated over four hundred billion dollars so far. That money is hitting contractors now. Luna: And that shows up in the ETF's holdings. The top positions are companies like Quanta Services, Caterpillar, Vulcan Materials — all reporting record backlogs. Lucas: Quanta Services, for example. They build electrical transmission lines and pipelines. Their backlog at the end of last quarter was over thirty billion dollars. That's up something like forty percent year-over-year. And they just raised their full-year guidance. Luna: Caterpillar is another one. Their construction industries segment saw revenue up twelve percent in the most recent quarter, driven by North America. And they specifically called out infrastructure and energy transition projects. Lucas: Right. And that's the key — it's not just roads and bridges. A big chunk of that infrastructure law is for clean energy transmission, broadband, and electric vehicle charging networks. That overlaps with the reshoring trend. Companies building new factories in the US need power substations and data lines. Luna: So this ETF, PAVE, it's not just a construction play. It's a bet on the physical side of the economic transformation that's been talked about for years. Lucas: Exactly. The fund holds about seventy-five stocks, but it's weighted toward engineering and construction firms, aggregates companies like Vulcan Materials, and heavy equipment makers. The top ten holdings make up about forty percent of the fund. It's concentrated, but it's targeted. Luna: What about the risks? One concern I've heard is that residential housing is slowing. Mortgage rates are still around six percent, housing starts are down. Doesn't that spill over into construction? Lucas: It's a fair point, but this ETF is almost entirely non-residential. Only about five percent of its holdings are tied to housing. The bulk is in heavy civil, energy, and industrial construction. The housing slowdown is real, but it's a separate market. The infrastructure spending is public and large-scale private projects — data centers, factories, pipelines. Luna: So the tailwind is multiyear. The infrastructure law authorized money through 2026 and beyond. Plus, there's the CHIPS Act and Inflation Reduction Act money for manufacturing and clean energy. All of that requires concrete, steel, and labor. Lucas: Right. And the ETF is up eighteen percent year-to-date, but it's still only about fifteen percent above its all-time high from 2024. There's room to run if the projects keep flowing. The risk is a recession that pauses state budgets or a policy shift, but the money is already obligated in many cases. Luna: What about valuation? PAVE has a price to earnings ratio around twenty-two, which is a bit above its five-year average. But given the earnings momentum, it might be justified. Lucas: The forward P/E is actually a bit lower because earnings are expected to grow. Analysts have the construction sector seeing earnings growth of around fifteen percent over the next twelve months. So the premium is modest. Compare that to the S&P 500's forward P/E of around twenty-three, and it's not stretched. Luna: And the dividend yield is about one point four percent. Not huge, but for an infrastructure ETF, it's solid. And you get that growth kicker. Lucas: One more data point: the Russell 2000, which holds a lot of small-cap industrials, is up three point five percent in the last five days alone. That's way ahead of the S&P and the Dow. The rotation into smaller, more domestically focused companies is real, and infrastructure is a big part of that story. Luna: So for listeners who are tired of the mega-cap tech narrative and want exposure to something tangible — roads, power grids, factories — PAVE is a straightforward way to play it. Lucas: If today was actually useful to you, the way these stay ad-free is listener support. If you've ever gotten an idea from this show that helped you think about a decision differently, head over to buy me a coffee dot com slash fexingo. It's a simple way to keep the conversations going without any ads. Luna: Yeah, it's a small gesture that makes a big difference for us. We really appreciate it. Lucas: Back to infrastructure — one thing I'd add: keep an eye on the monthly construction spending report from the Census Bureau. The April data came in at an annualized rate of two point one trillion dollars, which is an all-time high. If that keeps trending up, the tailwind for PAVE and its holdings should persist. Luna: And the ETF has low expenses, just thirty basis points. For an actively managed theme, that's pretty lean. Lucas: So the question is: do you want to own the companies that are literally rebuilding the country's physical assets? If the answer is yes, PAVE is worth a look. Not a recommendation, just a case study in how policy meets markets. Luna: I think we'll be talking about this theme for a while. Thanks for the deep dive, Lucas. Lucas: Always. That's it for today. Catch you next time.