Designed to provide broad exposure to the Utilities - Infrastructure segment of the equity market, the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (
GRID Quick Quote GRID - Free Report) is a passively managed exchange traded fund launched on 11/16/2009.
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.
Investor-friendly, sector ETFs provide many options 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%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $210.14 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.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 Quick Quote APTV - Free Report) accounts for about 8.46% of total assets, followed by Abb Ltd (ABBN.SW) and Johnson Controls International Plc ( JCI Quick Quote 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 roughly 6.37%, and it's up approximately 53.31% in the last one year (as of 02/10/2021). 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 27.54% 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.
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 a great 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 Quick Quote PAVE - Free Report) tracks INDXX U.S. Infrastructure Development Index and the iShares Global Infrastructure ETF ( IGF Quick Quote IGF - Free Report) tracks S&P Global Infrastructure Index. Global X U.S. Infrastructure Development ETF has $1.22 billion in assets, iShares Global Infrastructure ETF has $3 billion. PAVE has an expense ratio of 0.47% and IGF charges 0.46%. Bottom Line
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