Rural America now has a mutual fund dedicated to its long-awaited revival

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By Joy Wiltermuth

Fund was in the works long before Biden swept into office with big infrastructure plans

Rural America Growth & Income Fund (HRRLX), a new mutual fund launched by electric co-op asset manager Homestead Funds, looks to invest in rural businesses and communities long overdue for an economic boom.

The fund comes on the heels of President Joe Biden’s first 100 days in office, in which sweeping measures to vaccinate the U.S. population have been put into action and plans outlined to invest trillions worth of federal dollars in the economy, including the heartland and its rural outposts.

But while the stars may have aligned for its rollout, Homestead Funds began working on the Rural America fund more than a year ago, before a light appeared at the end of the tunnel of the COVID-19 crisis or Biden won the White House.

“The timing couldn’t be any more perfect,” said Mark Santero, CEO of Homestead Funds, a $2.7 billion mutual-fund company, of the Biden administration’s proposals to invest in America’s neglected infrastructure and in antipoverty measures for families, children and communities.

“It looks like we are reacting to everything going on [in Washington],” Santero said of the vast spending proposals to bolster the nation in the wake of the pandemic. “But that’s not the case. We saw an opportunity, and we wanted to create a fund that shows our membership we believe in the rural economy.”

Last week, Biden unveiled a $1.8 trillion proposal aimed at domestic priorities (link), including education and child care, to be paid for by extra taxes on the wealthy. Like his previously detailed $2.3 trillion infrastructure package (link), the families plan likely will face resistance from congressional Republicans.

The National Rural Electric Cooperative Association created Homestead Funds in 1990 to help bolster the financial position of its member co-ops, but it now has 10 funds available to the public.

The actively managed Rural America Growth & Income Fund specifically invests in companies and sectors with roots in the rural economy, defined as having at least 10% of its capital expenditures, or at least 10% of its total revenue, coming from rural America.

That can mean agribusiness, consumer products, financial services, health care, transportation, technology and infrastructure, including the push to bring fast and affordable internet to all households in the U.S., a key goal that Biden last week said will be overseen by Vice President Kamala Harris (link).

It comes as companies like Tractor Supply Co. (TSCO) that cater to farmers and ranchers also have benefited as more millennial homeowners have been moving to suburban and rural areas.

Read: 11 million birds and counting: Tractor Supply sales signal robust rebound for rural America (http://11 million birds and counting: Tractor Supply sales signal robust rebound for rural America)

“There is no other fund that is like this fund,” Santero told MarketWatch. “It’s not an infrastructure fund. It’s not an agriculture fund. It’s both equity and debt securities, and it invests in businesses that are part of the rural economy.”

Most farms in America lacked electricity until President Franklin D. Roosevelt signed the Rural Electrification Act of 1936 (link). But in terms of building roads, bridges, energy and water resources, there hasn’t been a major infrastructure bill aimed at rural development since the Eisenhower administration (link).

Santero said he sees the makings of a rural boom over the next decade or two, even if Biden’s massive infrastructure bill ends up being closer to $900 billion worth of spending.

“We feel the rural economy is at an inflection point, because of the lack of attention it has received over the past couple of decades,” he said. “It starts with broadband. It starts with access to smart technology.”

See: Why the rally for corn, soybeans and wheat likely isn’t over (link)

Read next: Opportunity in America starts with fixing the internet, says social investing pioneer (link)

-Joy Wiltermuth; 415-439-6400; AskNewswires@dowjones.com

 

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05-03-21 0900ET

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