As the global economy expands, the infrastructure industry is poised for significant growth and development. In today’s rapidly advancing technological era, the infrastructure sector is not just keeping pace but actively incorporating digital and technological innovations. The industry is vital in building roads, bridges, oil and gas pipelines, waste management systems, and utilities.
Given the ongoing growth in the infrastructure sector, investing in ETFs such as Global X U.S. Infrastructure Development ETF (PAVE), iShares Global Infrastructure ETF (IGF), and iShares U.S. Infrastructure ETF (IFRA) could be beneficial. These ETFs have earned a ‘Strong Buy’ rating in our proprietary rating system, reflecting their potential for strong returns.
The Biden-Harris administration’s Bipartisan Infrastructure Law (BIL) has earmarked $1.2 trillion for infrastructure spending, including $550 billion in new federal investments over the next five years. With the BIL Act in full swing, the government allocated $55 billion to improve drinking water by replacing lead pipes and removing dangerous chemicals, along with $25 billion for airport repairs and $17 billion for port infrastructure.
As governments worldwide increase their infrastructure investments, confidence in the sector is growing, presenting a prime opportunity for investors to capitalize on these initiatives. With that in mind, let’s look at the fundamentals of the above-mentioned infrastructure ETFs in detail:
Global X U.S. Infrastructure Development ETF (PAVE)
PAVE seeks to invest in companies that benefit from a potential increase in infrastructure activity in the United States, including those involved in producing raw materials, heavy equipment, engineering, and construction. Global X Management Company LLC manages the fund.
The fund has $7.95 billion in assets under management (AUM). Its top holdings are Trane Technologies plc (TT) with a 3.62% weighting, United Rentals, Inc. (URI) at 3.36%, Parker-Hannifin Corporation (PH), and Eaton Corp. Plc (ETN), at 3.29% and 3.19%, respectively. The fund has a total of 100 holdings.
PAVE has an expense ratio of 0.47%, compared to the category average of 0.44%. Its fund inflows were $306.32 million over the past three months and $1.26 billion over the past six months.
The fund pays an annual dividend of $0.24, translating to a 0.61% yield at the prevailing price level. Its dividend payouts have grown at a 35.3% CAGR over the past three years. The fund’s four-year average yield is 0.58%.
Over the past nine months, PAVE has gained 24.9% to close the last trading session at $38.63. The ETF had an NAV of $38.63 as of August 28, 2024.
PAVE’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to a Strong 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 Trade and Buy & Hold. Of the 36 ETFs in the Industrials Equities ETFs group, it is ranked #2.
Beyond what we stated above, we have also given PAVE a grade for Peer. Get all PAVE ratings here.
iShares Global Infrastructure ETF (IGF)
IGF, managed by BlackRock Fund Advisors, invests in companies operating across energy, oil, gas, consumable fuels, transportation, and other infrastructure sectors. The fund uses a representative sampling technique to track the S&P Global Infrastructure Index’s performance.
The fund has a total of 75 holdings. Its top holdings include NextEra Energy, Inc. (NEE) with a 5.84% weighting, Transurban Group Ltd. (TCL) at 4.85%, followed by Aena SME SA (ANEA) and Enbridge Inc. (ENB) with 4.70% and 4.24% weightings, respectively.
IGF’s trailing-12-month dividend of $1.74 yields 3.35% on the current price level, while its four-year average dividend yield is 2.72%.
The fund has an expense ratio of 0.42% compared to the category average of 0.44%. IGF’s fund outflows over the past three months came in at $68 million. Also, the ETF has a beta of 0.86.
IGF has gained 14% over the past year and 12.8% over the past six months to close the last trading session at $51.84. As of August 28, 2024, IGF had an AUM of $3.84 billion and an NAV of $51.85.
IGF’s POWR Ratings reflect solid prospects. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
IGF has an A grade for Trade and Buy & Hold and a B for Peer. Among the 133 ETFs in the B-rated Global Equities ETFs group, it is ranked #8. To access all of IGF’s POWR Ratings, click here.
iShares U.S. Infrastructure ETF (IFRA)
BlackRock Fund Advisors manages IFRA, an ETF that aims to track the performance of the NYSE FactSet U.S. Infrastructure Index. The fund invests in stocks of U.S. companies operating across various market capitalizations, focusing on those involved in infrastructure-related sectors like materials, industrials, construction transportation, and utilities.
With $2.62 billion in AUM, its top holdings are Middlesex Water Company (MSEX) with a 0.82% weighting in the fund, Unitil Corporation (UTL) at 0.81%, followed by TC Energy Corporation (TRP), and Ameren Corporation (AEE) at 0.80% weight each, respectively. The ETF has a total of 160 holdings.
The ETF’s expense ratio is 0.30%, lower than the category average of 0.44%. IFRA fund inflows were $92.64 million over the past three months and $111.53 million over the past year.
The fund pays an annual dividend of $0.79, which translates to a 1.75% yield at the current price level. Its four-year average yield is 1.89%.
IFRA has gained 20.5% over the past nine months and 16.3% over the past year to close the last trading session at $44.94. The fund’s NAV was $44.92 as of August 28, 2024.
IFRA’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. IFRA is ranked #9 among 36 ETFs in the B-rated Industrials Equities ETFs group. Click here to access all the IFRA ratings.
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PAVE shares were trading at $39.11 per share on Thursday morning, up $0.48 (+1.24%). Year-to-date, PAVE has gained 13.74%, versus a 19.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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