Looking for broad exposure to the Utilities - Infrastructure segment of the equity market? You should consider the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID), a passively managed exchange traded fund launched on 11/16/2009.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Infrastructure is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $765.69 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Infrastructure segment of the equity market. GRID seeks to match the performance of the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index before fees and expenses.
The NASDAQ OMX Clean Edge Smart Grid Infrastructure Index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.70%, making it the most expensive product in the space.
It has a 12-month trailing dividend yield of 0.76%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Aptiv Plc (NYSE:APTV) accounts for about 8.95% of total assets, followed by Johnson Controls International Plc (NYSE:JCI) and Eaton Corporation Plc (NYSE:ETN).
The top 10 holdings account for about 60.13% of total assets under management.
Performance and Risk
So far this year, GRID has gained about 24.90%, and is up roughly 33.84% in the last one year (as of 12/06/2021). During this past 52-week period, the fund has traded between $76.37 and $105.89.
The ETF has a beta of 1.18 and standard deviation of 27.39% for the trailing three-year period, making it a high risk choice in the space. With about 72 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, GRID is a great option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares Global Infrastructure ETF (IGF) tracks S&P Global Infrastructure Index and the Global X U.S. Infrastructure Development ETF (PAVE) tracks INDXX U.S. Infrastructure Development Index. IShares Global Infrastructure ETF has $3.05 billion in assets, Global X U.S. Infrastructure Development ETF has $5.26 billion. IGF has an expense ratio of 0.43% and PAVE charges 0.47%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID): ETF Research Reports
Johnson Controls International plc (JCI): Free Stock Analysis Report
Eaton Corporation, PLC (ETN): Free Stock Analysis Report
iShares Global Infrastructure ETF (IGF): ETF Research Reports
Global X U.S. Infrastructure Development ETF (PAVE): ETF Research Reports
Aptiv PLC (APTV): Free Stock Analysis Report
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