5 Best Infrastructure ETFs

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.”

4. Bny Mellon Global Infrastructure Income ETF (BATS:BKGI)

5-Year Performance as of September 25: 6.96%

The Bny Mellon Global Infrastructure Income ETF (BATS:BKGI) provides a distinctive approach to investing in infrastructure. It focuses on a wide range of infrastructure assets, both traditional and non-traditional, creating a broader investment opportunity within the infrastructure sector. The fund was launched on November 2, 2022, and as of August 31, 2023, it holds a portfolio of 31 stocks. As of September 25, 2023, the ETF has net assets amounting to nearly $15 million, and its expense ratio is 0.65%.

ONEOK, Inc. (NYSE:OKE) is one of the largest holdings of the Bny Mellon Global Infrastructure Income ETF (BATS:BKGI). ONEOK, Inc. (NYSE:OKE) is involved in different aspects of the natural gas and natural gas liquids business in the United States. This includes activities like collecting, processing, separating, storing, moving, and promoting natural gas and NGLs. They divide their operations into three segments – Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines.

According to Insider Monkey’s second quarter database, 35 hedge funds were bullish on ONEOK, Inc. (NYSE:OKE), compared to 33 funds in the preceding quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the largest position holder in the company, with 2.3 million shares valued at $140.8 million.

Here is what Miller Howard Investments has to say about ONEOK, Inc. (NYSE:OKE) in its Q3 2021 investor letter:

“In late August, we increased the portfolio’s cyclical exposure by trimming utilities after a period of relative outperformance and reallocating the capital to midstream energy, which had pulled back over the summer. We added ONEOK Inc. (OKE) with the expectation that it will benefit from increasing natural gas and natural gas liquids (NGL) recovery in the Bakken region.”

3. iShares U.S. Infrastructure ETF (BATS:IFRA)

5-Year Performance as of September 25: 38.45%

The iShares U.S. Infrastructure ETF (BATS:IFRA), ranking 3rd on our list of the best infrastructure ETFs, aims to follow the NYSE FactSet U.S. Infrastructure Index, which comprises stocks from U.S. companies linked to infrastructure. These companies stand to gain from potential growth in domestic infrastructure projects. The fund was launched on April 3, 2018, and it manages assets worth $2.08 billion as of September 25, 2023, while featuring an expense ratio of 0.30%.

The Greenbrier Companies, Inc. (NYSE:GBX) is a prominent holding of the iShares U.S. Infrastructure ETF (BATS:IFRA). The Greenbrier Companies, Inc. (NYSE:GBX) creates, produces, and sells equipment for railroad freight cars in North America, Europe, and South America. The company has three main divisions – Manufacturing, Maintenance Services, and Leasing & Management Services. Its clients include railways, leasing firms, financial institutions, shippers, carriers, and transportation companies.

According to Insider Monkey’s second quarter database, 15 hedge funds were bullish on The Greenbrier Companies, Inc. (NYSE:GBX), up from 12 funds in the last quarter. Ken Griffin’s Citadel Investment Group held a significant position in the company, with 206,505 shares worth $8.9 million.

White Brook Capital Partners made the following comment about The Greenbrier Companies, Inc. (NYSE:GBX) in its second quarter 2023 investor letter:

“The Greenbrier Companies, Inc. (NYSE:GBX): Greenbrier posted a solid quarter with beats on revenue and margins and indicated continued strength in the business model in line with what we’ve noted in these commentaries in past quarters.”

2. Global X U.S. Infrastructure Development ETF (BATS:PAVE)

5-Year Performance as of September 25: 77.04%

The Global X U.S. Infrastructure Development ETF (BATS:PAVE) seeks to match the performance of the Indxx U.S. Infrastructure Development Index. This index includes companies positioned to benefit from increased infrastructure activity in the United States. These companies are involved in different sectors, such as raw material production, heavy equipment, engineering, and construction. Global X U.S. Infrastructure Development ETF (BATS:PAVE) was launched on March 6, 2017, with net assets of $5.04 billion as of September 25, 2023. It has an expense ratio of 0.47%. The fund has a portfolio comprising 98 stocks as of September 25, 2023. Global X U.S. Infrastructure Development ETF (BATS:PAVE), based on its 5-year performance, is one of the best performing infrastructure ETFs.

Parker-Hannifin Corporation (NYSE:PH) is one of the largest holdings of the Global X U.S. Infrastructure Development ETF (BATS:PAVE). Parker-Hannifin Corporation (NYSE:PH) is a global manufacturer involved in producing and distributing motion and control technologies and systems. Their products cater to a range of industries, including mobile, industrial, and aerospace. The company functions through two segments – Diversified Industrial and Aerospace Systems. 

According to Insider Monkey’s second quarter database, 41 hedge funds were bullish on Parker-Hannifin Corporation (NYSE:PH), compared to the last quarter when 49 funds had invested in the stock. Harris Associates is the largest stakeholder of the company, with 2.26 million shares worth $883.16 million.

Here is what Aristotle Value Equity has to say about Parker-Hannifin Corporation (NYSE:PH) in its Q2 2023 investor letter:

“Parker Hannifin, the manufacturer of motion and control technologies, was a primary contributor during the quarter. In the latter half of 2022, the company closed on the acquisition of Meggitt. The cash transaction value of £7 billion (approximately $8.5 billion) was modest compared to the firm’s enterprise value of ~$50 billion, however a meaningful indication of management’s prowess. This, in our opinion, is a very well‐timed combination, as Meggitt adds complementary aerospace and defense businesses to an already existing strong portfolio. It should also support Parker Hannifin’s goal of shifting its portfolio toward aftermarket exposure—a catalyst we had identified for the company—since aftermarket sales are typically higher margin and result in more predictable recurring revenues than original‐equipment sales. Importantly, Parker Hannifin is no stranger to successful acquisitions, having integrated dozens (though mostly smaller than Meggitt) throughout its history. As such, we look forward to the prospect of the latest combination, further positioning the company to achieve new heights.”

1. First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ:GRID)

5-Year Performance as of September 25: 99.31%

First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ:GRID) is an ETF designed to mimic the performance of the Nasdaq Clean Edge Smart Grid Infrastructure Index. The ETF was created on November 16, 2009. As of February this year, GRID has an expense ratio of 0.58% and holds assets worth more than $1 billion as of September 22, 2023. First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ:GRID)’s portfolio consists of 100 stocks. It is one of the top infrastructure ETFs based on 5-year share price performance. 

National Grid plc (NYSE:NGG) is the largest holding of First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ:GRID). National Grid plc (NYSE:NGG) is engaged in the transmission and distribution of both electricity and gas. According to Insider Monkey’s second quarter database, 11 hedge funds were long National Grid plc (NYSE:NGG), compared to 7 funds in the last quarter. 

Here is what ClearBridge Investments SMID Cap Growth Strategy has to say about National Grid plc (NYSE:NGG) in its Q4 2021 investor letter:

“National Grid is one of the world’s largest publicly owned utilities, focused on transmission and distribution activities in electricity and gas. National Grid performed strongly during the quarter as the business continued to de-risk following prior regulatory decisions and significant M&A. The company also benefited from falling real rates, a solid set of half-year results and strong Investor Day presentations.”

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