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Is iShares U.S. Infrastructure ETF (IFRA) a Strong ETF Right Now?
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Launched on 04/03/2018, the iShares U.S. Infrastructure ETF (IFRA - Free Report) is a smart beta exchange traded fund offering 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Blackrock. IFRA has been able to amass assets over $2.10 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
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 least expensive products in the space.
It has a 12-month trailing dividend yield of 2.12%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For IFRA, it has heaviest allocation in the Utilities sector --about 42.10% of the portfolio --while Industrials and Materials round out the top three.
When you look at individual holdings, Constellation Energy Corp (CEG - Free Report) accounts for about 0.81% of the fund's total assets, followed by Nrg Energy Inc (NRG - Free Report) and New Fortress Energy Inc Class A (NFE - Free Report) .
The top 10 holdings account for about 7.84% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Infrastructure ETF return is roughly 4.53% so far, and was up about 3.45% over the last 12 months (as of 11/15/2023). IFRA has traded between $34.58 and $40.45 in this past 52-week period.
The fund has a beta of 1.05 and standard deviation of 19.22% for the trailing three-year period. With about 160 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 - 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 $3.49 billion in assets, Global X U.S. Infrastructure Development ETF has $5.29 billion. IGF has an expense ratio of 0.41% 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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Is iShares U.S. Infrastructure ETF (IFRA) a Strong ETF Right Now?
Launched on 04/03/2018, the iShares U.S. Infrastructure ETF (IFRA - Free Report) is a smart beta exchange traded fund offering 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Blackrock. IFRA has been able to amass assets over $2.10 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
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 least expensive products in the space.
It has a 12-month trailing dividend yield of 2.12%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For IFRA, it has heaviest allocation in the Utilities sector --about 42.10% of the portfolio --while Industrials and Materials round out the top three.
When you look at individual holdings, Constellation Energy Corp (CEG - Free Report) accounts for about 0.81% of the fund's total assets, followed by Nrg Energy Inc (NRG - Free Report) and New Fortress Energy Inc Class A (NFE - Free Report) .
The top 10 holdings account for about 7.84% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Infrastructure ETF return is roughly 4.53% so far, and was up about 3.45% over the last 12 months (as of 11/15/2023). IFRA has traded between $34.58 and $40.45 in this past 52-week period.
The fund has a beta of 1.05 and standard deviation of 19.22% for the trailing three-year period. With about 160 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 - 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 $3.49 billion in assets, Global X U.S. Infrastructure Development ETF has $5.29 billion. IGF has an expense ratio of 0.41% 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.