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Should You Invest in the Global X U.S. Infrastructure Development ETF (PAVE)?

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Designed to provide broad exposure to the Utilities - Infrastructure segment of the equity market, the Global X U.S. Infrastructure Development ETF (PAVE - Free Report) is a passively managed exchange traded fund launched on 03/06/2017.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Infrastructure is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.

Index Details

The fund is sponsored by Global X Management. It has amassed assets over $231.12 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Infrastructure segment of the equity market. PAVE seeks to match the performance of the INDXX U.S. Infrastructure Development Index before fees and expenses.

The INDXX U.S. Infrastructure Development Index measure the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.47%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.54%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 71.20% of the portfolio. Materials and Information Technology round out the top three.

Looking at individual holdings, Fastenal Co (FAST - Free Report) accounts for about 4.18% of total assets, followed by Rockwell Automation Inc (ROK - Free Report) and United Rentals Inc (URI - Free Report) .

The top 10 holdings account for about 33.57% of total assets under management.

Performance and Risk

The ETF has lost about -3.61% so far this year and it's up approximately 15.81% in the last one year (as of 08/26/2020). In that past 52-week period, it has traded between $10.02 and $17.92.

The ETF has a beta of 1.34 and standard deviation of 29.44% for the trailing three-year period. With about 94 holdings, it effectively diversifies company-specific risk.

Alternatives

Global X U.S. Infrastructure Development ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. PAVE, then, is not the best option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. Instead, there are better ETFs in the space to consider.

SPDR SP Global Infrastructure ETF (GII - Free Report) tracks S&P Global Infrastructure Index and the iShares Global Infrastructure ETF (IGF - Free Report) tracks S&P Global Infrastructure Index. SPDR SP Global Infrastructure ETF has $353.82 million in assets, iShares Global Infrastructure ETF has $3.19 billion. GII has an expense ratio of 0.40% 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.

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