In this article, we discuss 5 best infrastructure ETFs. If you wish to read our discussion on the infrastructure industry, head over to 10 Best Infrastructure ETFs.
5. iShares Environmental Infrastructure and Industrials ETF (NASDAQ:EFRA)
5-Year Performance as of September 25: 6.77%
Ranking 5th on our list of the best infrastructure ETFs is the iShares Environmental Infrastructure and Industrials ETF (NASDAQ:EFRA), which aims to reflect the performance of the FTSE Green Revenues Select Infrastructure and Industrials Net Index. This index comprises both U.S. and international companies that are engaged in providing infrastructure and industrial solutions with a focus on promoting energy efficiency, reducing emissions, mitigating pollution, and maximizing land and resource usage. The ETF was launched on November 1, 2022, and by September 25, 2023, it held a portfolio of 52 stocks. Its net assets as of September 25 amount to $4.2 million, and the fund comes with an expense ratio of 0.47%.
Westinghouse Air Brake Technologies Corporation (NYSE:WAB) is a significant holding of the iShares Environmental Infrastructure and Industrials ETF (NASDAQ:EFRA). Westinghouse Air Brake Technologies Corporation (NYSE:WAB) provides technology-driven locomotives, machinery, solutions, and services for the freight rail and passenger transit industries globally. It functions through two segments – Freight and Transit.
According to Insider Monkey’s second quarter database, 41 hedge funds were bullish on Westinghouse Air Brake Technologies Corporation (NYSE:WAB), compared to 52 funds in the prior quarter. Richard S. Pzena’s Pzena Investment Management held the largest position in the company, with 7.56 million shares worth $829.13 million.
Here is what TGV Intrinsic Fund has to say about Westinghouse Air Brake Technologies Corporation in its Q2 2021 investor letter:
“The second change concerns the American railway supplier Westinghouse Air Brake Technologies (Wabtec). Wabtec took over the railway division from General Electric (GE) in 2019. As part of this, Rafael Santana – who had come over from GE – became the new CEO of Wabtec. The previous CEO, Ray Betler, is one of the best corporate leaders I know, and I particularly appreciated the decentralized corporate culture he embodied. The operating figures have developed nicely since 2019 under Rafael Santana. However, from conversations with current and former employees of Wabtec, it is becoming increasingly clear to me that the GE culture, which is designed to achieve short-term corporate goals, is establishing itself within the company. This culture is not necessarily bad – but it is a culture that does not fit the long-term orientation of the TGV Intrinsic.
Accordingly, I recommended the sale of all Wabtec shares despite the decent operational development. Wabtec is a good example of a distinction between “process” and “result”. In the long run, the right process typically leads to a good result and the wrong process to a bad one. In the short term, however, even a wrong process can lead to a good result. Considered by itself, Wabtec’s financial development since 2019 (result) is not sufficient to make an investment recommendation for the future. Changes in the corporate culture (process) often only become noticeable in the financial figures after several years and are therefore a more meaningful indicator of long-term operational development than short-term historical business development. Accordingly, my discussions with current and former Wabtec employees about changes in the corporate culture are the crucial reason for the sell recommendation, as I assume that the GE culture will lead to worse operating results in the long term.”
