Back to top

Image: Bigstock

Should You Invest in the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID)?

Read MoreHide Full Article

The First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID - Free Report) was launched on 11/16/2009, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Infrastructure segment of the equity market.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Utilities - Infrastructure is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $242.85 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Infrastructure segment of the equity market. GRID seeks to match the performance of the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index before fees and expenses.

The NASDAQ OMX Clean Edge Smart Grid Infrastructure Index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.70%, making it the most expensive product in the space.

It has a 12-month trailing dividend yield of 0.65%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Looking at individual holdings, Aptiv Plc (APTV - Free Report) accounts for about 8.46% of total assets, followed by Abb Ltd (ABBN.SW) and Johnson Controls International Plc (JCI - Free Report) .

The top 10 holdings account for about 59.82% of total assets under management.

Performance and Risk

So far this year, GRID has added about 5.68%, and it's up approximately 55.78% in the last one year (as of 03/04/2021). During this past 52-week period, the fund has traded between $36.62 and $87.28.

The ETF has a beta of 1.22 and standard deviation of 27.61% for the trailing three-year period, making it a high risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, GRID is an excellent option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Global X U.S. Infrastructure Development ETF (PAVE - Free Report) tracks INDXX U.S. Infrastructure Development Index and the iShares Global Infrastructure ETF (IGF - Free Report) tracks S&P Global Infrastructure Index. Global X U.S. Infrastructure Development ETF has $1.54 billion in assets, iShares Global Infrastructure ETF has $2.95 billion. PAVE has an expense ratio of 0.47% and IGF charges 0.46%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Published in