Three ETFs Influenced By Obama’s Public Works Plan

In yet another attempt to bolster the US economy, President Obama and his administration used the long weekend to unveil a public works plan that emphasizes on transportation and infrastructure, potentially influencing the iShares Dow Jones Transporation Average (IYT), the PowerShares Dynamic Building & Construction Portfolio (PKB) and the PowerShares DB Base Metals (DBB).

This latest plan is estimated to cost as much as $50 billion over the next six years and includes rebuilding nearly 15,000 miles of road, constructing nearly 4,000 miles of railway, revamping airport runways and moderninzing the air traffic control system.  Additionally, President Obama called for an “infrastructure bank” which would focus on funding regional transportation upgrades.

According to the White House, this new public works plan is not expected to add to an already ballooning deficit over time and is expected to be funded through the elimination of tax deductions for oil and gas companies.   Furthermore, this plan comes at a time when the US is faced with the prospect of Democrats losing control of Congress in the November elections and a series of mixed economic reports, including an increase in the nation’s overall unemployment rate.

As mentioned earlier, some ETFs that are likely to be influenced by Obama’s plan include:

  • iShares Dow Jones Transportation Average (IYT), which is a diversified play on transports and includes Union Pacific Corporation (UNP) and Norfolk Southern (NSC) in its top holdings.
  • PowerShares Dynamic Building & Construction Portfolio (PKB), which includes holdings that could benefit from increased infrastructure spending like Fluor Corporation (FLR) and Owens Corning (OC).
  • PowerShares DB Base Metals (DBB), which holds futures contracts in copper, aluminum and zinc, all metals expected to see increased demand with increased infrastructure spending.

Disclosure: No Positions

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About etftutor
Kevin Grewal is the founder, editor and publisher of ETF Tutor and serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was a quantitative analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton. He is contributing author on The Street - his articles can also be found published on various sites including Yahoo! Finance, The Globe and Mail , Daily Markets, MSN Money, Seeking Alpha, Fidelity Investments, Traders Library, and Minyanville. Prior to this, Mr. Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds

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