Admin July 12, 2024
The infrastructure building industry is becoming more digitized, and technology is playing an increasingly essential role in infrastructure projects’ design, construction, and management. This trend is expected to continue in the foreseeable future.
Given this positive sentiment, investing in infrastructure ETFs Global X U.S. Infrastructure Development ETF (PAVE), iShares Global Infrastructure ETF (IGF), and iShares U.S. Infrastructure ETF (IFRA) might be wise choices for those looking to capitalize on the spending boom.
The global infrastructure market is seeing substantial growth, fueled by segments like residential and non-residential construction, energy and utilities infrastructure, and transport infrastructure. This growth is supported by increased investments from both the public and private sectors, which aim to boost economic development and generate employment opportunities.
The infrastructure sector market is expected to grow at a CAGR of 6.3% by 2029. Moreover, as numerous industries experience swift digital transformation, industrial services are vital for effectively implementing Industry 4.0.
This leads to improved operational capabilities, predictive maintenance, and data-driven decision-making. The industrial services market is estimated to grow at a CAGR of 6.1% by 2028.
With that in mind, let’s look at the fundamentals of the top three infrastructure ETFs.
Global X U.S. Infrastructure Development ETF (PAVE)
PAVE seeks to invest in companies that stand to benefit from a potential increase in infrastructure activity in the United States, including those involved in producing raw materials, heavy equipment, engineering, and construction.
The fund’s top holdings include Trane Technologies plc (TT) with a 3.7% weighting, Eaton Corp. Plc (ETN) at 3.7%, followed by Emerson Electric Co. (EMR) with a 3.2% weighting.
PAVE’s trailing-12-month dividend of $0.24 yields 0.62% on the current price level, while its four-year average dividend yield is 0.58%. Its dividend payouts have grown at a 35.3% CAGR over the past three years.
The fund has an expense ratio of 0.47% compared to the category average of 0.44%. Over the past six months, PAVE’s fund inflows came in at $1.34 billion and $1.67 billion over the past year. Also, the ETF has a beta of 1.31.
PAVE has gained 19.4% over the past year and 12.5% over the past six months to close the last trading session at $37.85. As of July 12, 2024, PAVE had an AUM of $7.26 billion and an NAV of $37.86.
PAVE’s POWR Ratings reflect solid prospects. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PAVE has an A grade for Buy & Hold and a B for Trade. Of the 36 ETFs in the Industrials Equities ETFs group, it is ranked #11.
Beyond what we stated above, we have also given PAVE a grade for Peer. Get all PAVE ratings here.
iShares Global Infrastructure ETF (IGF)
The iShares Global Infrastructure ETF seeks to track the investment results of an index composed of developed market equities in the infrastructure industry. The fund generally will invest at least 80% of its assets in the component securities of its index and in investments with economic characteristics substantially identical to those of its index.
With $3.59 billion in AUM, its top holdings are NextEra Energy, Inc. (NEE), with a 5.6% weighting in the fund, followed by Aena SME SA at 5%, and Transurban Group Ltd. at 4.7% weight.
The ETF’s expense ratio is 0.41%, compared to the category average of 0.44%. IGF fund outflows were $58 million over the past month. The fund pays an annual dividend of $1.74, which translates to a 3.49% yield at the current price level. Its four-year average yield is 2.71%.
IGF has gained 15.3% over the past nine months and 5.9% over the past year to close the last trading session at $49.76. It has a five-year beta of 0.86. The fund’s NAV was $49.68 as of July 12, 2024.
IGF’s solid fundamentals are reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The fund has an A grade for Trade and Buy & Hold. IGF is ranked #8 among 133 ETFs in the B-rated Global Equities ETFs. Click here to access all the IGF ratings.
iShares U.S. Infrastructure ETF (IFRA)
The iShares U.S. Infrastructure ETF seeks to track the investment results of an index composed of equities of U.S. companies that have infrastructure exposure, and that could benefit from a potential increase in domestic infrastructure activities.
The fund has $4.19 billion in assets under management (AUM). Its top holdings are Meta Platforms Inc. (META) with a 22.5% weighting, Alphabet Inc. (GOOGL) at 12.3%, and Alphabet Inc. Class C (GOOG) at 9.4%.
IFRA has an expense ratio of 0.30%, compared to the category average of 0.44%. Its fund inflows were $75.67 million over the past three months and $10.54 million over the past six months. Also, it has a beta of 1.09, indicating higher volatility compared to the broader market.
The fund pays an annual dividend of $0.79, translating to a 1.82% yield at the prevailing price level. Its dividend payouts have grown at an 11.2% CAGR over the past three years. The fund’s four-year average yield is 1.90%.
Over the past year, IFRA has gained 10.4% to close the last trading session at $43.25. It has also gained 1.8% over the past month. The ETF had an NAV of $43.27 as of July 12, 2024.
IFRA’s POWR Ratings reflect this promising outlook. The ETF’s overall B rating equates to a Buy in our proprietary rating system.
IFRA has an A grade for Buy & Hold and a B for Trade. Among the 36 ETFs in the Industrials Equities ETFs group, it is ranked #15. To access all of IFRA’s POWR Ratings, click here.
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PAVE shares were trading at $38.44 per share on Friday afternoon, up $0.59 (+1.56%). Year-to-date, PAVE has gained 11.79%, versus a 19.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor’s degree in finance and marketing and is pursuing the CFA program.
Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More…
