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

Zacks Equity Research
·3-min read

Looking for broad exposure to the Utilities - Infrastructure segment of the equity market? You should consider the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID), a passively managed exchange traded fund launched on 11/16/2009.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways 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 3, placing it in top 19%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.49 billion, making it one of the larger 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.06%.

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, Abb Ltd (ABBN.SW) accounts for about 8.98% of total assets, followed by Eaton Corporation Plc (ETN) and Schneider Electric Se (SU.FP).

The top 10 holdings account for about 56% of total assets under management.

Performance and Risk

The ETF has added about 14.16% and it's up approximately 16.34% so far this year and in the past one year (as of 07/10/2024), respectively. GRID has traded between $85.32 and $121.69 during this last 52-week period.

The ETF has a beta of 1.24 and standard deviation of 20.79% for the trailing three-year period, making it a high risk choice in the space. With about 111 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 $3.60 billion in assets, Global X U.S. Infrastructure Development ETF has $7.27 billion. IGF has an expense ratio of 0.41% 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID): ETF Research Reports

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

To read this article on Zacks.com click here.

Zacks Investment Research