The First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID) was launched on 11/16/2009, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Infrastructure segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 $1.09 billion, 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
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.
Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.33%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Eaton Corporation Plc (ETN) accounts for about 8.49% of total assets, followed by Johnson Controls International Plc (JCI) and Abb Ltd (ABBN.SW).
The top 10 holdings account for about 58.50% of total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF has gained about 15.27% so far, and it's up approximately 18.12% over the last 12 months (as of 08/29/2023). GRID has traded between $73.72 and $107.86 in this past 52-week period.
The ETF has a beta of 1.24 and standard deviation of 22.02% for the trailing three-year period, making it a high risk choice in the space. With about 85 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.
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 $3.70 billion in assets, Global X U.S. Infrastructure Development ETF has $5.13 billion. IGF has an expense ratio of 0.41% and PAVE charges 0.47%.
Bottom Line
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First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID): ETF Research Reports
Johnson Controls International plc (JCI) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
iShares Global Infrastructure ETF (IGF): ETF Research Reports
Global X U.S. Infrastructure Development ETF (PAVE): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
