An increase in infrastructure and construction activities, combined with solid federal support, has been driving the industry's growth over the past few months. Last November, the Biden Administration passed its landmark $1.2 trillion bipartisan infrastructure bill, which allocated funds to rebuild roads, rails, bridges, and other infrastructure, along with access to clean water and high-speed internet.
According to a report by Research and Markets, the construction industry in the United States is expected to reach $1.65 trillion by 2026, growing at a 5% CAGR. The rising government spending on infrastructure development should support the market’s growth in the U.S. Given the bright growth prospects, investing in infrastructure ETFs could deliver solid returns to the investors.
Given these factors, we think it could be profitable to invest in quality infrastructure ETFs iShares U.S. Infrastructure ETF (IFRA), ProShares DJ Brookfield Global Infrastructure ETF (TOLZ), and SPDR S&P Global Infrastructure ETF (GII).
Click here to checkout our Infrastructure Report for 2022
iShares U.S. Infrastructure ETF (IFRA)
IFRA tracks an index of U.S.-listed infrastructure companies. The companies must derive at least half of their revenue from the U.S. Each company is classified into one of two categories, which are infrastructure enablers (construction companies, engineering services, machinery, and materials) or infrastructure asset owners and operators (utilities, railroad transportation, energy transportation). Each category receives a 50% weighting in the index, and individual holdings are weighted equally within the categories.
IFRA tracks the NYSE FactSet U.S. Infrastructure Index. It has a 0.30% expense ratio, compared with the 0.43% category average. It has a total of 159 holdings. IFRA has $1.78 billion in assets under management, and over the past six months, IFRA's fund flows came in at $984.32 million, and $1.14 billion over the past year. It has a 1.06 beta.
The fund pays a $0.69 annual dividend, which yields 1.78% at the prevailing share price. IFRA has improved 7.7% in price over the past six months and 4.9% over the past year to close the last trading session at $38.42. It had a $38.42 NAV as of May 27, 2022.
IFRA's strong fundamentals are reflected in its POWR Ratings. The ETF has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
IFRA has an A grade for Trade, Peer, and Buy & Hold. The fund is ranked #1 among 36 ETFs in the Industrials Equities ETFs group.
To access all the IFRA POWR Ratings, click here.
ProShares DJ Brookfield Global Infrastructure ETF (TOLZ)
TOLZ tracks an index of companies that derive more than 70% of their cash flows from infrastructure-related businesses, including airports, storage and transportation, water, and toll roads. The fund is eligible to hold up to 25% directly in MLPs, although it does not distribute K-1s for tax reporting. It is rebalanced semi-annually in June and December and reweighted quarterly, starting every March.
TOLZ tracks the Dow Jones Brookfield Global Infrastructure Composite Index. It has a 0.47% expense ratio compared to the 0.43% category average. It has a total of 119 holdings. The fund's primary holdings include American Tower Corporation (AMT) with 7.4% weighting, Enbridge Inc. (ENB) with 6.98% weighting, Crown Castle International Corp (CCI) with 5.20%, and National Grid plc (N.G.) with 4.25% weighting. It has $152.60 million in assets under management. Over the past six months, TOLZ's fund flows have come in at $1.07 million, while its NAV was $50.56 as of May 27, 2022.
The ETF pays a $1.57 dividend annually, yielding 1.66% at its current share price. Furthermore, TOLZ's dividends have increased at a 3.4% CAGR over the past three years and a 7.6% CAGR over the past five years. TOLZ has gained 5.7% in price year-to-date and 8.1% over the past year and closed the last trading session at $50.74. It has a 0.78 beta.
TOLZ's strong outlook is reflected in its POWR Ratings. The ETF has an overall A rating, which translates to Strong Buy in our proprietary rating system.
It has an A for Peer Grade, Buy & Hold Grade, and Trade Grade. Among the 133 ETFs in the Global Equities ETFs group, it is ranked #5.
To get all the POWR Ratings for TOLZ, click here.
SPDR S&P Global Infrastructure ETF (GII)
GII tracks a market-cap-weighted index of infrastructure companies from developed and emerging markets engaged in the energy, transportation, and utility sectors. The transportation and utility sectors receive a 40% weighting each, followed by the energy sector with 20% weighting. The stocks trade on a developed-market exchange and are cap-weighted within each bucket, with no individual security with a weighting of more than 5%.
GII tracks the S&P Global Infrastructure Index. It has a 0.40% expense ratio, compared with the 0.43% category average. It has a total of 78 holdings. The fund's major holdings include Transurban Group Ltd. (TCL) with a 5.07% weighting, followed by Enbridge Inc. (ENB) and Atlantia S.p.A (ATASY) with 4.91% and 4.88% weightings, respectively. It has $531.40 million in assets under management. GII's fund flows have come in at $44.47 million over the past six months and $65.70 million over the past year. It has a 0.83 beta.
The fund pays a $1.65 annual dividend, which yields 2.80% at its prevailing share price. GII has increased 12.8% over the past six months and 9.9% over the past year to close the last trading session at $58.73. It had a $58.59 NAV as of May 27, 2022.
GII's POWR Ratings reflect a strong outlook. The ETF has an overall A grade, equating to Strong Buy in our proprietary rating system.
GII has an A grade for Peer, Trade, and Buy & Hold. The fund is ranked #2 among 133 ETFs in the Global Equities ETFs group.
To access all GII ratings, click here.
Click here to checkout our Infrastructure Report for 2022
IFRA shares were trading at $37.81 per share on Tuesday morning, down $0.61 (-1.59%). Year-to-date, IFRA has declined -0.71%, versus a -12.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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