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.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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 15, placing it in bottom 6%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $400.29 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.
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 0.59%.
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, Abb Ltd (ABBN.SW) accounts for about 8.73% of total assets, followed by Johnson Controls International Plc (
JCI Quick Quote JCI - Free Report) and Schneider Electric Se (SU.FP).
The top 10 holdings account for about 60.04% of total assets under management.
Performance and Risk
The ETF has added roughly 14.19% and is up about 60.11% so far this year and in the past one year (as of 06/09/2021), respectively. GRID has traded between $52.45 and $92.02 during this last 52-week period.
The ETF has a beta of 1.19 and standard deviation of 27.68% for the trailing three-year period, making it a high risk choice in the space. With about 71 holdings, it effectively diversifies company-specific risk.
First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, GRID is a sufficient option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.
IShares Global Infrastructure ETF (
IGF Quick Quote IGF - Free Report) tracks S&P Global Infrastructure Index and the Global X U.S. Infrastructure Development ETF ( PAVE Quick Quote PAVE - Free Report) tracks INDXX U.S. Infrastructure Development Index. IShares Global Infrastructure ETF has $3.15 billion in assets, Global X U.S. Infrastructure Development ETF has $3.81 billion. IGF has an expense ratio of 0.46% and PAVE charges 0.47%. Bottom Line
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