The American Society of Civil Engineers’ (ASCE) most recent Infrastructure Report Card for the U.S. gave the nation a rather disappointing grade of D+ based on the state of its electricity, transportation and water infrastructure systems.
In 2020, a status report from the ASCE noted that the pandemic “has made a difficult situation worse,” as the health crisis has disrupted critical revenue streams for infrastructure systems across the country.
There may be a chance for America’s aging roads, bridges, airports, wastewater systems and power grid as hope grows for a bipartisan focus on the topic in Congress. That could allocate billions of dollars toward addressing these needs and boosting jobs in the process. For investors looking to play a future investment in these projects, here are five leading infrastructure exchange-traded funds:
— iShares Global Infrastructure ETF (ticker: IGF)
— SPDR S&P Global Infrastructure ETF (GII)
— FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA)
— Global X U.S. Infrastructure Development ETF (PAVE)
— First Trust North American Energy Infrastructure Fund (EMLP)
iShares Global Infrastructure ETF (IGF)
The largest dedicated infrastructure fund on Wall Street, IGF boasts more than $3 billion in assets. This is obviously not solely a U.S.-focused fund, as the name implies.
Top positions among the 75 stocks in this infrastructure ETF include names you may not even have heard of, such as Spanish airport operator Aena SME SA (AENA) or Australia toll road operator Transurban (TCL). However, there are also equally large domestic players in all corners of the infrastructure industry — such as NextEra Energy ( NEE), for example — with U.S. stocks representing about one-third of the overall portfolio.
IGF has an annual expense ratio of 0.46%, or $46 for every $10,000 invested.
SPDR S&P Global Infrastructure ETF (GII)
Incredibly similar to the prior iShares fund, GII offers a close list of top holdings.
That said, its expense ratio is a hair lower, at 0.4% annually. Furthermore, a tweak in its global portfolio results in a slightly higher dividend yield over the last 12 months of 3.1%.
GII is also much smaller, at only about $300 million in total assets at present, but the infrastructure ETF is still large and liquid enough to be worth a look over the dominant iShares fund because of these structural factors alone. Over several years, these traits could add up to material outperformance for this smaller fund.
[See: 7 Energy ETFs to Buy Now.]
FlexShares STOXX Global Broad Infrastructure ETF (NFRA)
A fund that’s nearly as large as the iShares fund even though it comes from a smaller-profile ETF shop is this FlexShares infrastructure ETF.
With around $2 billion in assets, NFRA is a well-established investment in the space. And with more than 200 total holdings, the fund is in some ways more diversified than the other offerings on this list. Top holdings include domestic telecom powerhouse Verizon Communications ( VZ), Canadian National Railway Co. ( CNI) and Spanish electric utility Iberdrola SA (IBDRY).
NFRA comes with an expense ratio of 0.48%.
Global X U.S. Infrastructure Development ETF (PAVE)
A purely domestic play, this Global X fund includes a host of U.S. stocks that would benefit from potential infrastructure investment.
Its top holdings are names like construction equipment provider United Rentals ( URI), industrial goods giant Fastenal Co. ( FAST) and railroad CSX Corp. ( CSX) to name a few. With 94 total holdings and no single stock representing more than about 4% of the entire portfolio, this is a simple but effective way to play any increase in domestic infrastructure investment.
It’s a bit smaller than the other funds, at less than $700 million in total assets, but it’s admittedly more focused with its domestic-only holdings. PAVE has an expense ratio of 0.47%.
First Trust North American Energy Infrastructure Fund (EMLP)
Dedicated wholly to energy infrastructure, the nearly $2 billion EMLP fund is a unique twist on investing in this piece of the American economy.
As you may have guessed from the ticker symbol, the components of this infrastructure ETF are mainly MLPs, or master limited partnerships. These uniquely structured energy companies get preferential tax treatment to accommodate their capital-intensive business models that involve gas pipelines, oil storage tanks, transportation fleets and a host of other expensive but necessary “midstream assets” that get oil from the fields to refiners and end users.
Top components include well-known MLPs such as Enterprise Products Partners ( EPD) — and since these partnerships tend to offer big dividends, EMLP also boasts a generous 5.2% yield at present. One thing to note, EMLP’s expense ratio is a bit high, at 0.96%.
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