A Well-Built Fund Rival
The T. Rowe Price Global Infrastructure Fund, launched on Feb. 11, is likely to prove a tough rival to the more established funds in its category. Annual costs are estimated at 1.31% of assets—about a fifth less than the average charged by competing mutual funds. Plus, retail infrastructure offerings from Morgan Stanley (MS) and Cohen & Steers charge front- or back-end loads, while T. Rowe funds are no-load. The funds invest in a variety of companies that build roads, utilities, and other projects.
T. Rowe (TROW) portfolio specialist Nick Beecroft says the fund currently has about a third of its holdings in North America and the rest overseas. Right now, infrastructure companies in emerging markets look very favorable. "We have significantly more emerging-markets exposure than is commonly found in a global fund," says Beecroft. India alone, he says, is likely to spend around $750 billion on infrastructure in the next eight years. Likewise, China will continue to pour money into infrastructure development. Investors eager to tap directly into these markets can also consider these exchange-traded funds: iShares S&P Emerging Markets Infrastructure and PowerShares Emerging Markets Infrastructure, up 22% and 30%, respectively, over the past year.
New Year Rally?
The Chinese New Year, which kicked off on Feb. 14, could very well augur a U.S. dollar rally against the Japanese yen, according to research from BNP Paribas. In 15 of the past 20 years, the dollar hit a bottom against the yen within a few days of Chinese New Year. According to the Feb. 10 report, "the reasons behind this seasonal rally remain difficult to underpin."
One explanation could be the fiscal yearend for Japanese companies on Mar. 31. In anticipation, Japanese investors tend to cash out of non-Japanese holdings. But "once these repatriation flows are completed, the U.S. dollar tends to reverse course." Last year the dollar gained 11% on the yen from the start of Chinese New Year on Jan. 26 to Mar. 31. Over the same period, the ProShares UltraShort Yen Exchange Traded Fund gained more than 20%. But this ETF is not for the faint at heart: It uses leverage to deliver double the daily gains—or losses—of the dollar's price to the yen.