Back to top

Image: Bigstock

Is iShares U.S. Infrastructure ETF (IFRA) a Strong ETF Right Now?

Read MoreHide Full Article

The iShares U.S. Infrastructure ETF (IFRA - Free Report) was launched on 04/03/2018, and is a smart beta exchange traded fund designed to offer broad exposure to the Utilities/Infrastructure ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Blackrock. It has amassed assets over $1.79 billion, making it one of the larger ETFs in the Utilities/Infrastructure ETFs. IFRA, before fees and expenses, seeks to match the performance of the NYSE FACTSET U.S. INFRASTRUCTURE INDEX .

The NYSE FactSet U.S. Infrastructure Index comprises of equities of U.S. companies that have infrastructure exposure and that could benefit from a potential increase in domestic infrastructure activities.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.30% for this ETF, which makes it one of the cheaper products in the space.

IFRA's 12-month trailing dividend yield is 1.95%.

Sector Exposure and Top Holdings

ETFs offer 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.

IFRA's heaviest allocation is in the Utilities sector, which is about 42.40% of the portfolio. Its Industrials and Materials round out the top three.

Looking at individual holdings, Blk Csh Fnd Treasury Sl Agency (XTSLA) accounts for about 1.27% of total assets, followed by Vistra Corp (VST - Free Report) and Mge Energy Inc (MGEE - Free Report) .

IFRA's top 10 holdings account for about 8.38% of its total assets under management.

Performance and Risk

The ETF return is roughly 3.25% so far this year and was up about 2.55% in the last one year (as of 05/08/2023). In the past 52-week period, it has traded between $32.24 and $39.80.

IFRA has a beta of 1.03 and standard deviation of 22% for the trailing three-year period. With about 166 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Infrastructure ETF is an excellent option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Global Infrastructure ETF (IGF - Free Report) tracks S&P Global Infrastructure Index and the Global X U.S. Infrastructure Development ETF (PAVE - Free Report) tracks INDXX U.S. Infrastructure Development Index. IShares Global Infrastructure ETF has $3.95 billion in assets, Global X U.S. Infrastructure Development ETF has $4 billion. IGF has an expense ratio of 0.40% and PAVE charges 0.47%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Utilities/Infrastructure ETFs.

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.

Published in