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The best infrastructure ETFs for Q4 2022

by SuperiorInvest

Infrastructure exchange traded funds (ETFs) provide exposure to companies that build and maintain large projects and systems such as roads, bridges, waterways, railways, communication networks and electrical systems. Companies in infrastructure sector includes Dominion Energy Inc. (D), Fortis Inc. (FTS) and Consolidated Edison Inc. (ED).

Investors looking to own a diversified basket of infrastructure companies rather than betting on individual stocks could consider infrastructure ETFs.

Key things

  • The infrastructure sector has outperformed the broader US stock market over the past year.
  • The Infrastructure Exchange Traded Funds (ETFs) with the best annual total returns are GII, IGF and IFRA.
  • The top holdings of these ETFs are NextEra Energy Inc. in the first two funds and Infrastructure and Energy Alternatives Inc. in the third fund.

Six different infrastructure ETFs trade in the United States, except inverse and leverage effect ETFs as well as funds with less than $50 million assets under management (AUM). The infrastructure sector, as measured by the S&P Global Infrastructure Index, has outperformed the broader US stock market over the past 12 months with a total return of 8.6%, compared to a -5.4% total return for the S&P 500 as of 22/2022. The best-performing infrastructure ETF based on performance over the past year is the SPDR S&P Global Infrastructure ETF (GII)

We examine three of the best infrastructure ETFs below. All numbers valid as of August 23, 2022 except as noted below. To focus on the Fund’s investment strategy, the best holdings listed for the ETF do not include cash holdings and holdings purchased with the proceeds of securities lending, except in unusual cases such as an exceptionally large portion of cash.

  • Performance in one year: 8.3%
  • Expense ratio: 0.40%
  • Annual dividend yield: 2.26%
  • Three-month average daily volume: 64,855
  • AUM: $563.8 million
  • Start Date: January 25, 2007
  • Issuer: State Street

GII tracks the S&P Global Infrastructure Index, an index consisting of the 75 largest infrastructure-related stocks based on float-adjusted Market capitalization. The fund provides exposure to companies in the transportation, utilities and energy infrastructure sectors. About 80% of the fund’s portfolio is split roughly evenly between utility and industrial stocks, with the rest in energy stocks. GII is a multi-cap mixed fund.

Among GII’s most significant holdings are NextEra Energy Inc. (NEE), which generates and distributes energy to wholesale and retail consumers in North America; Transurban Group Ltd. (TCL: ASX), a toll road operator based in Australia; and Enbridge Inc. (ENB), a Canadian energy pipeline company that transports oil and gas.

  • Performance in one year: 8.2%
  • Expense ratio: 0.40%
  • Annual dividend yield: 2.64%
  • Three-month average daily volume: 540,231
  • AUM: $3.6 billion
  • Start date: December 10, 2007
  • Issuer: BlackRock Financial Management

Like the GII, the IGF tracks the S&P Global Infrastructure Index. This fund is multi-cap and uses a blended approach, focusing its holdings on companies in developed markets. The utilities and transportation sector makes up about 79% of the fund’s holdings, with nearly all of the remaining holdings in energy.

IGF’s major holdings include NextEra Energy, Transurban Group and Endbridge.

  • Performance in one year: 6.9%
  • Expense ratio: 0.30%
  • Annual dividend yield: 1.81%
  • Three-month average daily volume: 403,536
  • AUM: $1.8 billion
  • Start date: 04/03/2018
  • Issuer: BlackRock Financial Management

IFRA tracks the NYSE FactSet US Infrastructure Index, which tracks the performance of U.S. stocks in a wide range of sectors including energy transportation and storage, railroads, construction and engineering services. The fund is equally weighted between owners and operators and focuses on companies that can benefit from domestic infrastructure growth. Utilities and industrials make up almost three-quarters of the fund’s assets, followed by energy and other sectors.

IFRA’s top holdings as of August 24 are Infrastructure and Energy Alternatives Inc. (IEA), which specializes in renewable energy infrastructure; Constellation Energy Corp. (CEG), a leading provider of carbon-free energy and electricity for homes and businesses; and Otter Tail Corp. (OTTR), which is both a supplier of electricity and a manufacturer of metalwork and other products.

The comments, opinions and analysis expressed herein are for informational purposes only and should not be construed as individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information contained herein to be reliable, we do not guarantee its accuracy or completeness. The opinions and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analysis contained in our content are provided as of the date of publication and are subject to change without notice. The material is not intended to be a complete analysis of all material facts relating to any country, region, market, industry, investment or strategy.

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