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

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If you're interested in broad exposure to the Utilities - Infrastructure segment of the equity market, look no further than the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID - Free Report) , 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.

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 3, placing it in top 19%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $717.36 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.63%, making it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 1.15%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Schneider Electric Se (SU.FP) accounts for about 8.85% of total assets, followed by Abb Ltd (ABBN.SW) and Johnson Controls International Plc (JCI - Free Report) .

The top 10 holdings account for about 59.88% of total assets under management.

Performance and Risk

The ETF has added about 10.38% so far this year and is up about 7.34% in the last one year (as of 02/20/2023). In that past 52-week period, it has traded between $73.72 and $97.52.

The ETF has a beta of 1.25 and standard deviation of 29.97% for the trailing three-year period, making it a high risk choice in the space. With about 84 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 $3.84 billion in assets, iShares Global Infrastructure ETF has $3.91 billion. PAVE has an expense ratio of 0.47% and IGF charges 0.40%.

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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