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

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), a passively managed exchange traded fund launched on 11/16/2009.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities – Infrastructure is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $653.70 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

When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 0.89%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, 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 8.13% of total assets, followed by Aptiv Plc (APTV) and Johnson Controls International Plc (JCI).

The top 10 holdings account for about 60.23% of total assets under management.

Performance and Risk

The ETF has lost about -9.97% and is down about -6.69% so far this year and in the past one year (as of 08/15/2022), respectively. GRID has traded between $76.38 and $105.89 during this last 52-week period.

The ETF has a beta of 1.22 and standard deviation of 28.91% for the trailing three-year period, making it a high risk choice in the space. With about 79 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, GRID is a good option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.

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 $3.63 billion in assets, Global X U.S. Infrastructure Development ETF has $4.12 billion. IGF has an expense ratio of 0.43% and PAVE charges 0.47%.

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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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
 
Aptiv PLC (APTV) : Free Stock Analysis Report
 
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