Best Infrastructure ETFs for Q1 2022

ENFR, PAVE, and IFRA are the best infrastructure ETFs for Q1 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.

Many companies are likely to benefit from the $1 trillion infrastructure bill, which was passed by both houses of Congress and signed by President Biden on Nov. 15, 2021. The spending is aimed primarily at building, repairing, and upgrading highways; improving ports and supply chain infrastructure; and building clean energy infrastructure.

Key Takeaways

  • The infrastructure sector significantly underperformed 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 ENFR, PAVE, and IFRA.
  • The top holdings of these ETFs are Enbridge Inc., Nucor Corp., and Pacific Gas & Electric Co., respectively.

Eight 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 significantly underperformed the broader U.S. stock market over the past 12 months, with a total return of 12.1% compared to the S&P 500’s total return of 32.1%, as of Nov. 11, 2021. The best-performing infrastructure ETF, based on performance over the past year, is the Alerian Energy Infrastructure ETF (ENFR).

We examine the best three infrastructure ETFs below. All numbers are as of Nov. 11, 2021.

Alerian Energy Infrastructure ETF (ENFR)

  • Performance Over One-Year: 61.6%
  • Expense Ratio: 0.35%
  • Annual Dividend Yield: 7.46%
  • Three-Month Average Daily Volume: 16,258
  • Assets Under Management: $64.0 million
  • Inception Date: Nov. 1, 2013
  • Issuer: SS&C

ENFR is a multi-cap fund that targets the Alerian Midstream Energy Select Index. The index is composed of North American midstream energy infrastructure companies, including corporations and master limited partnerships (MLPs), engaged in pipeline transportation, storage, and processing of energy commodities. Nearly 40% of the fund’s holdings are in companies involved in gathering and processing. ENFER’s focus on energy infrastructure makes it different from the other two funds below, both of which invest in a broader portfolio of infrastructure companies.

The top holdings of ENFR include Enbridge Inc. (ENB:TSE), a Canada-based multinational pipeline company; Enterprise Products Partners L.P. (EPD), a midstream national gas and crude oil pipeline company; and TC Energy Corp. (TRP:TSE), a Canada-based energy company.

Global X U.S. Infrastructure Development ETF (PAVE)

  • Performance Over One-Year: 49.0%
  • Expense Ratio: 0.47%
  • Annual Dividend Yield: 0.33%
  • Three-Month Average Daily Volume: 1,540,782
  • Assets Under Management: $5.3 billion
  • Inception Date: March 6, 2017
  • Issuer: Mirae Asset Global Investments Co. Ltd.

PAVE tracks the Indxx U.S. Infrastructure Development Index, which provides exposure to infrastructure activity in the United States through companies that provide raw materials and heavy equipment, as well as companies engaged in physical construction and engineering. The ETF is composed of companies with various market capitalizations (market caps), and 92% of its holdings are within two sectors: industrials and materials.

PAVE follows a blended strategy, investing in a mix of growth and value stocks. Its top three holdings are Nucor Corp. (NUE), a producer of steel and related products; Eaton Corp. PLC (ETN), an Ireland-domiciled American multinational power management company; and Kansas City Southern (KSU), a transportation holding company focused on the railroad industry.

iShares U.S. Infrastructure ETF (IFRA)

  • Performance Over One-Year: 37.0%
  • Expense Ratio: 0.30%
  • Annual Dividend Yield: 1.83%
  • Three-Month Average Daily Volume: 161,724
  • Assets Under Management: $746.8 million
  • Inception Date: April 3, 2018
  • Issuer: BlackRock Financial Management

IFRA tracks the NYSE FactSet U.S. Infrastructure Index, an index composed of U.S. companies that benefit from increases in infrastructure activity. The ETF provides exposure to a range of infrastructure companies, from railroads and utilities to materials and construction companies, and follows a blended strategy, investing in a mix of value and growth stocks across the market cap spectrum. The fund’s largest exposure is in the utilities sector, followed by industrials and materials.

IFRA’s top three holdings are Pacific Gas & Electric Co. (PCG), a natural gas and electricity utility company; EnLink Midstream LLC (ENLC), a midstream energy services company for natural gas and oil producers; and Otter Tail Corp. (OTTR), an electricity company serving the upper Midwest.

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