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

Smart Beta ETF report for IFRA

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This story originally appeared on Zacks

Making its debut on 04/03/2018, smart beta exchange traded fund iShares U.S. Infrastructure ETF (IFRA) provides investors broad exposure to the Utilities/Infrastructure ETFs category of the market.

- Zacks

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.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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 managed by Blackrock. IFRA has been able to amass assets over $771.96 million, making it one of the average sized ETFs in the Utilities/Infrastructure ETFs. IFRA seeks to match the performance of the NYSE FACTSET U.S. INFRASTRUCTURE INDEX before fees and expenses.

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

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 cousins, other things remaining the same.

Annual operating expenses for IFRA are 0.30%, which makes it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.87%.

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.

Representing 42.80% of the portfolio, the fund has heaviest allocation to the Utilities sector; Industrials and Materials round out the top three.

Taking into account individual holdings, Enlink Midstream Common Units (ENLC) accounts for about 1.02% of the fund's total assets, followed by Sunnova Energy International Inc (NOVA) and Pg&e Corp (PCG).

Its top 10 holdings account for approximately 8.78% of IFRA's total assets under management.

Performance and Risk

So far this year, IFRA return is roughly 26.94%, and is up about 24.87% in the last one year (as of 12/20/2021). During this past 52-week period, the fund has traded between $29.41 and $37.93.

IFRA has a beta of 1.06 and standard deviation of 26.85% for the trailing three-year period. With about 156 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Infrastructure ETF is a reasonable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Global Infrastructure ETF (IGF) tracks S&P Global Infrastructure Index and the Global X U.S. Infrastructure Development ETF (PAVE) tracks INDXX U.S. Infrastructure Development Index. IShares Global Infrastructure ETF has $3.07 billion in assets, Global X U.S. Infrastructure Development ETF has $5.40 billion. IGF has an expense ratio of 0.43% 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.



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iShares U.S. Infrastructure ETF (IFRA): ETF Research Reports

 

Pacific Gas & Electric Co. (PCG): Free Stock Analysis Report

 

iShares Global Infrastructure ETF (IGF): ETF Research Reports

 

EnLink Midstream, LLC (ENLC): Free Stock Analysis Report

 

Global X U.S. Infrastructure Development ETF (PAVE): ETF Research Reports

 

Sunnova Energy International Inc. (NOVA): Free Stock Analysis Report

 

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Zacks Investment Research