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.
- The infrastructure sector underperformed the broader market over the past year.
- The infrastructure ETFs with the best 1-year trailing total return are NFRA, TOLZ, and IGF.
- The top holdings of these ETFs are Canadian National Railway, American Tower, and NextEra Energy, respectively.
There are 5 infrastructure ETFs, excluding funds with less than $50 million in assets under management (AUM). The infrastructure sector, as measured by the S&P Global Infrastructure Index, has dramatically underperformed the broader market with a total return of -8.6% over the past 12 months compared to the S&P 500's total return of 24.8%, as of September 2, 2020. The best infrastructure ETF, based on performance over the past year, is the FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA). We examine the top 3 infrastructure ETFs below. All numbers below are as of September 3, 2020.
- Performance over 1-Year: 3.2%
- Expense Ratio: 0.47%
- Annual Dividend Yield: 2.17%
- 3-Month Average Daily Volume: 104,327
- Assets Under Management: $1.9 billion
- Inception Date: October 8, 2013
- Issuer: FlexShares
NFRA tracks the STOXX Global Broad Infrastructure Index, a global equity index composed of companies involved in the infrastructure sector. The ETF provides exposure to large-cap companies that derive at least half of their revenue from one or more of the following segments: energy, communications, utilities, transportation, and government outsourcing, such as hospitals, prisons, and postal services. The fund is primarily focused on North American equities, followed by Japan, Australia, and the U.K. Its top three holdings include Canadian National Railway Co. (CNR.TO), a Canada-based rail and related transportation company; Verizon Communications Inc. (VZ), a multinational telecommunications conglomerate; and AT&T Inc. (T), a multinational provider of communications and digital entertainment.
- Performance over 1-Year: -8.0%
- Expense Ratio: 0.46%
- Annual Dividend Yield: 3.04%
- 3-Month Average Daily Volume: 24,548
- Assets Under Management: $161.0 million
- Inception Date: March 25, 2014
- Issuer: ProShares
TOLZ tracks the Dow Jones Brookfield Global Infrastructure Composite Index, which is composed of global pure-play infrastructure companies. The ETF is focused on large-cap equities across the infrastructure sector in developed markets. It offers exposure exclusively to companies whose primary business is owning and operating infrastructure projects. These companies enjoy growing global demand and their businesses have high barriers to entry that limit competition. Companies that supply services to the infrastructure industry, like construction and engineering, are excluded. The fund follows a blended strategy, investing in a mix of both value and growth stocks. Its top three holdings include American Tower Corp. (AMT), a real estate investment trust (REIT) that owns, operates, and develops multi-tenant communications real estate; Enbridge Inc. (ENB), a Canada-based energy transportation company; and Crown Castle International Corp. (CCI), a REIT that provides access to wireless infrastructure.
- Performance over 1-Year: -8.4%
- Expense Ratio: 0.46%
- Annual Dividend Yield: 3.07%
- 3-Month Average Daily Volume: 307,059
- Assets Under Management: $3.2 billion
- Inception Date: December 10, 2007
- Issuer: iShares
IGF tracks the S&P Global Infrastructure Index, which gauges the performance of global infrastructure companies. The ETF provides exposure to companies that provide various infrastructure services, including transportation, communication, water, and electricity. The fund is focused on large-cap equities across developed markets with little exposure to emerging markets. It follows a blended strategy, investing in both growth and value stocks. The fund's top three holdings include NextEra Energy Inc. (NEE), an electric power and energy infrastructure company; Aena SME SA (AENA), a Spain-based company primarily engaged in airports operation; and Enbridge.