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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

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

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.

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 9, placing it in bottom 44%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $720.54 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.

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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

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 1.08%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Looking at individual holdings, Schneider Electric Se (SU.FP) accounts for about 8.85% of total assets, followed by Abb Ltd (ABBN.SW) and Johnson Controls International Plc (JCI).

The top 10 holdings account for about 59.88% of total assets under management.

Performance and Risk

The ETF return is roughly 11.71% and is up about 10.29% so far this year and in the past one year (as of 04/24/2023), respectively. GRID has traded between $73.72 and $97.87 during this last 52-week period.

The ETF has a beta of 1.25 and standard deviation of 23.73% for the trailing three-year period, making it a high risk choice in the space. With about 84 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 a great 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 $3.92 billion in assets, Global X U.S. Infrastructure Development ETF has $3.95 billion. IGF has an expense ratio of 0.40% 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

Johnson Controls International plc (JCI) : 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