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.
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.
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 16, placing it in bottom 0%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $261.52 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.
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 0.70%, making it the most expensive product in the space.
It has a 12-month trailing dividend yield of 0.72%.
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 9% of total assets, followed by Johnson Controls International Plc ( JCI Quick Quote JCI - Free Report) and Abb Ltd (ABBN.SW).
The top 10 holdings account for about 60.24% of total assets under management.
Performance and Risk
So far this year, GRID has added roughly 4.63%, and it's up approximately 99.55% in the last one year (as of 03/26/2021). During this past 52-week period, the fund has traded between $39.94 and $88.15.
The ETF has a beta of 1.22 and standard deviation of 27.68% 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 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 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 $2.04 billion in assets, iShares Global Infrastructure ETF has $3.02 billion. PAVE has an expense ratio of 0.47% and IGF charges 0.46%. Bottom Line
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