Building the Foundation of Tomorrow
November 08, 2022
Read Time 4 MIN
Traditional infrastructure has earned a grade of C- from the American Society of Civil Engineers. Many bridges, roads, airports and other “real asset” types of infrastructure are in drastic need of upgrade to remain safe. How this gets done, however, is the big question, as well as a potential opportunity.
U.S. population growth, increased consumer demand for sustainability, an increasingly apparent need for climate risk resiliency and the availability of funding from federal and state governments all provide the basis for a green infrastructure movement. Innovative companies across multiple sectors have an immense opportunity to build the “future of infrastructure.”
Seven Specific Sub-themes to Build the Foundation of Tomorrow
The U.S., as a whole, has been trending towards a greener society for years, e.g., the adoption of electric vehicles and ubiquitous presence of solar panels powering homes and commercial buildings. This demand requires a new type of infrastructure to support sustainable growth. VanEck Green Infrastructure ETF (RNEW) gives investors access to companies across seven “green” sub-themes. These themes provide diversified exposure to companies that will help grow this new U.S. infrastructure.
While traditional infrastructure focuses on bridges, roads, airports and the like, RNEW’s sub themes outline green fuel and energy, transportation, equipment, pollution, waste management and construction. RNEW invests in companies that derive at least 50% of their revenues from one or more of these seven sub-themes.
Government Spending Makes Way for New Investors
Although infrastructure spending may often become mired in government committees, we have recently seen bills signed into law that are aimed at providing funding for green infrastructure. For example, the Inflation Reduction Act has become a catalyst for green Infrastructure companies to grow and build out this sustainable foundation. The Act incentivizes consumer demand for products such as solar panels and electric vehicles by way of tax credits and provides loans and grants for businesses incentivizing decarbonization as well as clean energy manufacturing and retooling. These programs create opportunities for investments, and investors.
Source: progressivecaucuscenter.org. As of 2022.
Green Infrastructure Could Provide $12 Trillion Dollars in Potential Revenues
With the focus on green infrastructure continuing to expand, companies within the space may benefit. A recent study by McKinsey & Co. analyzed green infrastructure sectors similar to RNEW’s seven sub-themes and determined there is a potential $12 trillion in revenues up for grabs. We believe this is a clear opportunity for investors to take advantage of a previously untapped space.
Source: McKinsey & Co. As of 2022 Potential Revenues From Green Infrastructure Sectors.
RNEW capitalizes on the cultural and societal shift to a more sustainable way of life in the U.S. and provides access to a diversified set of companies all aiming to benefit from this shift, which we believe provides a long-term opportunity for investors.
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Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
Indxx US Green Infrastructure - MCAP Weighted Index (IUGIMWT) tracks the performance of those companies that are involved in the production, transmission, or distribution of green energy and/or are engaged in business activities that seek to establish a sustainable infrastructure to facilitate the holistic use of green energy and positively impact the environment.
“Indxx” is a service mark of Indxx and has been licensed for use for certain purposes by the Adviser. The Fund is not sponsored, endorsed, sold or promoted by Indxx. Indxx makes no representation or warranty, express or implied, to the owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly. Indxx has no obligation to take the needs of the Adviser or the shareholders of the Fund into consideration in determining, composing or calculating the Underlying Indices. Indxx is not responsible for and has not participated in the determination of the timing, amount or pricing of the Fund shares to be issued or in the determination or calculation of the equation by which the Fund shares are to be converted into cash. Indxx has no obligation or liability in connection with the administration, marketing or trading of the Fund.
An investment in the Fund may be subject to risks which include, among others, green infrastructure companies, green energy companies, environmental services industry, green investing strategy, industrials sector, energy sector, consumer discretionary sector, utilities sector, information technology sector, equity securities, micro-capitalization securities, small- and medium-capitalization companies, market, operational, index tracking, authorized participant concentration, new fund, absence of prior active market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect the Fund. Micro-, small- and medium-capitalization companies may be subject to elevated risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider a Fund's investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck ETFs, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus for VanEck Funds and VanEck ETFs carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
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Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
Indxx US Green Infrastructure - MCAP Weighted Index (IUGIMWT) tracks the performance of those companies that are involved in the production, transmission, or distribution of green energy and/or are engaged in business activities that seek to establish a sustainable infrastructure to facilitate the holistic use of green energy and positively impact the environment.
“Indxx” is a service mark of Indxx and has been licensed for use for certain purposes by the Adviser. The Fund is not sponsored, endorsed, sold or promoted by Indxx. Indxx makes no representation or warranty, express or implied, to the owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly. Indxx has no obligation to take the needs of the Adviser or the shareholders of the Fund into consideration in determining, composing or calculating the Underlying Indices. Indxx is not responsible for and has not participated in the determination of the timing, amount or pricing of the Fund shares to be issued or in the determination or calculation of the equation by which the Fund shares are to be converted into cash. Indxx has no obligation or liability in connection with the administration, marketing or trading of the Fund.
An investment in the Fund may be subject to risks which include, among others, green infrastructure companies, green energy companies, environmental services industry, green investing strategy, industrials sector, energy sector, consumer discretionary sector, utilities sector, information technology sector, equity securities, micro-capitalization securities, small- and medium-capitalization companies, market, operational, index tracking, authorized participant concentration, new fund, absence of prior active market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect the Fund. Micro-, small- and medium-capitalization companies may be subject to elevated risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider a Fund's investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck ETFs, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus for VanEck Funds and VanEck ETFs carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.