Best Infrastructure ETFs for Q4 2022

Best Infrastructure ETFs for Q4 2022

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

Investors seeking to own a diversified basket of infrastructure companies, rather than betting on an individual stock, might consider an infrastructure ETF.

Key Takeaways

  • The infrastructure sector outperformed the broader U.S. stock market over the past year.
  • The infrastructure exchange-traded funds (ETFs) with the best one-year trailing 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 distinct infrastructure ETFs trade in the United States, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). The infrastructure sector, as measured by the S&P Global Infrastructure Index, has outperformed the broader U.S. stock market over the past 12 months, with a total return of 8.6% compared to the S&P 500’s total return of -5.4%, as of August 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 the best three infrastructure ETFs below. All numbers are as of August 23, 2022 except where designated below. In order to focus on the fund’s investment strategy, the top holdings listed for ETFs exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.

  • Performance over one-year: 8.3%
  • Expense ratio: 0.40%
  • Annual dividend yield: 2.26%
  • Three-month average daily volume: 64,855
  • AUM: $563.8 million
  • Inception date: Jan. 25, 2007
  • Issuer: State Street

GII tracks the S&P Global Infrastructure Index, an index comprised of the 75 largest infrastructure-related stocks based on float-adjusted market capitalization. The fund provides exposure to transportation, utilities, and energy infrastructure companies. About 80% of the fund’s portfolio is split roughly evenly between utilities and industrials stocks, with energy stocks making up the remainder. GII is a multi-cap, blended fund.

The top holdings of GII include NextEra Energy Inc. (NEE), which generates and distributes energy to wholesale and retail consumers in North America; Transurban Group Ltd. (TCL: ASX), an Australia-based toll road operator; and Enbridge Inc. (ENB), a Canada-based energy pipeline company that transports oil and gas.

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

Like GII, 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 sectors comprise about 79% of the fund’s holdings, with nearly all of the remaining allocation in energy.

The top holdings of IGF include NextEra Energy, Transurban Group, and Endbridge.

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

IFRA tracks the NYSE FactSet U.S. Infrastructure Index, which tracks the performance of U.S. stocks in a broad range of areas including energy transport and storage, railroads, construction, and engineering services. The fund is equally-weighted between owners and operators and focuses on companies that may benefit from an uptick in domestic infrastructure activity. Utilities and industrials comprise nearly three-quarters of the fund’s assets, followed by energy and other sectors.

The top holdings of IFRA, as of Aug. 24, are Infrastructure and Energy Alternatives Inc. (IEA), which specializes in renewable energy infrastructure; Constellation Energy Corp. (CEG), a leader in carbon-free energy and power provider to homes and businesses; and Otter Tail Corp. (OTTR), which is both an electric power provider and a manufacturer of metal fabrication and other products.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views 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 analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.