Jan. 24 (Bloomberg) -- State Street Corp., the second- largest manager of exchange-traded funds, plans to open the first infrastructure-sector ETF in the U.S., reflecting growing investor interest in utilities and telecommunications companies.

The fund, which will begin trading on the American Stock Exchange within the next two weeks, will track the Macquarie Global Infrastructure 100 Index, according to Dodd Kittsley, director of ETF research at Boston-based State Street Global Advisors. The index includes telecommunications, electricity, water and gas-distribution companies in countries including the U.S., Australia, U.K., India, Brazil and Russia.

The value of project financings worldwide surged 35 percent to $163 billion in 2006, according to London-based trade publisher Infrastructure Journal. Countries such as Brazil and India have pledged to increase infrastructure spending as their economies grow, while the need to replace aging systems is spurring investments in the U.S. and the U.K.

``The asset class is attractive not just in developed markets, but also in emerging markets in Europe and Asia,'' Kittsley said in an interview. ``Telecommunications is one area really growing in both the developed and emerging countries.''

Barclays Global Investors in October opened an infrastructure ETF that is traded on the London Stock Exchange. The iShares Macquarie Global Infrastructure 100 has gathered $215 million in assets and has returned 1.8 percent since it began trading.

Focus Narrows

State Street, which started the first U.S. ETF in 1993, now manages $101 billion in ETFs, second to Barclays, which has more than $225 billion in assets.

Exchange-traded funds, like index-based mutual funds, invest in baskets of securities designed to mirror the performance of market benchmarks. While early ETFs were designed to mimic broad market indexes such as the Standard & Poor's 500, they have increasingly started focusing on narrower sectors ranging from gold to waste-management.

Unlike index funds, which are priced at the end of the day, the value of ETFs change as they trade throughout the day like stocks.

Last Updated: January 24, 2007 13:55 EST