10 Best Infrastructure ETFs

In this article, we discuss 10 best infrastructure ETFs.

As noted by Deloitte, significant changes in the economy, along with the transition to remote work and telemedicine, are causing noteworthy effects on infrastructure. Traditional physical infrastructure such as roads, bridges, and power systems is undergoing a transformation, becoming increasingly digital. This shift places an emphasis on technologies like broadband, self-driving vehicles, and intelligent infrastructure. Additionally, there is a growing emphasis on environmental considerations and broader societal advantages that are influencing the infrastructure sector’s evolution. Deloitte‘s report highlights key findings regarding how governments worldwide are shifting their infrastructure investments to adapt to changing trends. Notably, respondents believe that technologies like artificial intelligence, cloud computing, and cybersecurity will exert the most significant influence on infrastructure projects. AI and machine learning, in particular, are expected to have a substantial impact, with 55% of those surveyed expressing this view. As governments transition towards more digitally-oriented infrastructure, there is a growing concern about cyber risks. A significant majority, 76% of respondents, expect a heightened focus on data security over the next few years. Moreover, there is a noticeable demand for green infrastructure, with 60% of those surveyed expressing intentions to invest in urban spaces designed for walking, cycling, socializing, and dining.

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PwC highlighted that the infrastructure sector faced significant changes globally, driven by factors like the availability of funds, evolving social and environmental concerns, and rapid urbanization. COVID-19 introduced new challenges and its full impact will take time to unfold. In the short term, it will reshape the industry in four ways – increasing focus on operational resilience, affordability, the adoption of new technologies, and sustainability. Successful infrastructure projects require collaboration among various stakeholders, each with their own interests and agendas.

In 2022, the infrastructure sector remained resilient, even in the face of market challenges, according to UBS. Ongoing trends like digitalization and decarbonization will continue to drive the need for new investments. However, the overall economic conditions have significantly deteriorated. Investors can no longer rely on cheap credit to boost their investment returns. Moving forward, they must adopt a more strategic approach to investment and asset management to achieve positive outcomes. Inflation has drawn considerable attention to private infrastructure investments. This asset class has gained a reputation for its ability to stand strong in inflationary situations, mainly because it can adjust prices effectively and pass on higher costs to customers. Its defensive characteristics make it particularly appealing when times are uncertain, serving as a safe haven for investors. Performance data from 2005 to 2021 shows that private infrastructure investments performed better than public ones, especially when inflation was higher than usual. This performance difference became even more obvious when inflation was high and economic growth was slow. It is likely for the trend to continue through 2023, given that private markets had already outperformed public markets in the first half of the year.

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Similarly, J.P. Morgan‘s insights underline the strength and versatility of core private infrastructure investments. They seem to perform well regardless of economic cycles, highlighting the importance of diversifying investment portfolios. Similar trends are expected to continue throughout 2023. Katarina Roele, PhD, stated:

“Significant attractive investment opportunities in core private infrastructure remain due to the structural tailwinds of the need to modernize, replace and decarbonize existing assets.”

The global economy is grappling with challenges such as a recession, monetary tightening, rising living costs, and disruptions in various markets. Inflation is anticipated to remain high throughout the year, and this, along with labor shortages and pricing pressures, might pose challenges for plans involving significant construction and growth strategies. The global economic outlook suggests that we can expect slower, and in some cases, even stagnant growth in the near future. Many countries are heading towards recessions at a rapid pace. In this scenario, assets that do not generate much immediate cash flow and rely heavily on long-term growth or high exit values may face challenges. On the other hand, assets with a significant portion of their revenue coming from contracted or regulated sources, along with terms linked to inflation, are likely to fare better in this tough economic climate.

In this article, we discuss some of the best infrastructure ETFs, which offer investors exposure to companies like Canadian National Railway Company (NYSE:CNI), Westinghouse Air Brake Technologies Corporation (NYSE:WAB), and Parker-Hannifin Corporation (NYSE:PH).

Our Methodology

We used an ETF screener and filtered out the best infrastructure ETFs based on their 5-year performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors. These ETFs have accumulated significant gains in the past 5 years. The list is ranked in ascending order of the 5-year performance of these infrastructure ETFs as of September 25, 2023.

Photo by Denys Nevozhai on Unsplash

Best Infrastructure ETFs

10. ProShares DJ Brookfield Global Infrastructure ETF (NYSE:TOLZ)

5-Year Performance as of September 25: 2.41%

ProShares DJ Brookfield Global Infrastructure ETF (NYSE:TOLZ) aims to achieve investment results that closely follow the performance of the Dow Jones Brookfield Global Infrastructure Composite Index. This ETF was introduced on March 25, 2014, and as of June 30, 2023, it has a portfolio consisting of 110 stocks. It offers an expense ratio of 0.46%.

American Tower Corporation (NYSE:AMT) is one of the top holdings of the ProShares DJ Brookfield Global Infrastructure ETF (NYSE:TOLZ). American Tower Corporation (NYSE:AMT), a prominent global real estate investment trust, stands as a major independent holder, manager, and builder of properties for multiple communication purposes.

According to Insider Monkey’s second quarter database, 60 hedge funds were bullish on American Tower Corporation (NYSE:AMT), in contrast to the last quarter when 65 funds had invested in the stock. Charles Akre’s Akre Capital Management is the largest stakeholder of the company, with a position consisting of 6.74 million shares worth $1.31 billion.

Like Canadian National Railway Company (NYSE:CNI), Westinghouse Air Brake Technologies Corporation (NYSE:WAB), and Parker-Hannifin Corporation (NYSE:PH), American Tower Corporation (NYSE:AMT) is one of the top infrastructure stocks to watch. 

Akre Focus Fund made the following comment about American Tower Corporation (NYSE:AMT) in its second quarter 2023 investor letter:

“The Fund owns many businesses that stand to benefit enormously from A.I. The compute power demanded by A.I. is growing exponentially and will continue to fuel demand for the wireless and data center infrastructure provided by American Tower Corporation (NYSE:AMT). The two negative detractors from performance this quarter were American Tower and Danaher.”

9. SPDR S&P Kensho Intelligent Structures ETF (NYSE:SIMS)

5-Year Performance as of September 25: 3.99%

The SPDR S&P Kensho Intelligent Structures ETF (NYSE:SIMS) seeks to achieve investment results that track the total return performance of the S&P Kensho Intelligent Infrastructure Index. This index is designed to include companies that are at the forefront of innovation in the intelligent infrastructure sector. The fund was first introduced on December 26, 2017. By September 22, 2023, the fund’s assets under management amounted to $20.86 million, and its portfolio included 48 stocks. The expense ratio for this fund is 0.45%. SPDR S&P Kensho Intelligent Structures ETF (NYSE:SIMS) is one of the best infrastructure ETFs.

Carrier Global Corporation (NYSE:CARR) is one of the largest holdings of the SPDR S&P Kensho Intelligent Structures ETF (NYSE:SIMS). Carrier Global Corporation (NYSE:CARR) is a global company that specializes in technologies related to heating, ventilation, air conditioning, refrigeration, fire safety, security, and building automation. The company is divided into three segments – HVAC, Refrigeration, and Fire & Security.

According to Insider Monkey’s second quarter database, 34 hedge funds were bullish on Carrier Global Corporation (NYSE:CARR), in contrast to the last quarter when 41 funds had invested in the stock. Ric Dillon’s Diamond Hill Capital is the largest stakeholder of the company, with 4.35 million shares valued at $216.22 million.

Here is what Davis Opportunity Fund has to say about Carrier Global Corporation  in its Q3 2021 investor letter:

“In the industrial space, we own a select list of well-entrenched market leaders, such as Carrier Global, a global leader in heating, ventilation and air conditioning (HVAC) solutions.. These have recovered this year from their lulls in 2020, yet continue to trade at reasonable multiples of subdued earnings, creating a potential setup for the double play of recovering multiples on recovering earnings.”

8. SPDR S&P Global Infrastructure ETF (NYSE:GII)

5-Year Performance as of September 25: 5.23%

The SPDR S&P Global Infrastructure ETF (NYSE:GII) seeks to deliver investment results that align with the overall performance of the S&P Global Infrastructure Index. The ETF aims to offer exposure to the 75 largest infrastructure-related stocks, selected based on their float-adjusted market capitalization and liquidity. Launched on January 25, 2007, the fund has assets under management totaling $434.68 million as of September 22, 2023, with a portfolio of 75 stocks. Its expense ratio stands at 0.40%. SPDR S&P Global Infrastructure ETF (NYSE:GII) is one of the top infrastructure ETFs to monitor. 

NextEra Energy, Inc. (NYSE:NEE) is one of the biggest holdings of the SPDR S&P Global Infrastructure ETF (NYSE:GII). NextEra Energy, Inc. (NYSE:NEE) is engaged in the generation, transmission, distribution, and sale of electric power to retail and wholesale customers in North America. Their electricity is produced using wind, solar, nuclear, coal, and natural gas facilities. NextEra also has a significant presence in the development, construction, and operation of long-term contracted assets, focusing on clean energy solutions.

According to Insider Monkey’s second quarter database, 59 hedge funds were bullish on NextEra Energy, Inc. (NYSE:NEE), same as the preceding quarter. John Overdeck and David Siegel’s Two Sigma Advisors held a significant position in the company, with approximately 2.57 million shares worth $190.42 million.

ClearBridge Investments made the following comment about NextEra Energy, Inc. (NYSE:NEE) in its Q3 2022 investor letter:

“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”

7. iShares Global Infrastructure ETF (NASDAQ:IGF)

5-Year Performance as of September 25: 6.22%

The iShares Global Infrastructure ETF (NASDAQ:IGF), ranking 7th on our list of the best infrastructure ETFs, aims to replicate the performance of the S&P Global Infrastructure Index, which comprises equities from developed markets in the infrastructure sector. This ETF provides investors with exposure to companies involved in transportation, communication, water, and electricity services, offering a targeted way to invest in infrastructure stocks worldwide. It was launched on December 10, 2007. The ETF’s portfolio consisted of 75 stocks and its net assets, as of September 25, 2023, came in at $3.7 billion. The expense ratio is 0.41%.

The Southern Company (NYSE:SO) is one of the largest holdings of the iShares Global Infrastructure ETF (NASDAQ:IGF). The Southern Company (NYSE:SO) is involved in producing, transmitting, and distributing electricity. The company operates through three segments – Gas Distribution Operations, Gas Pipeline Investments, and Gas Marketing Services.

According to Insider Monkey’s second quarter database, 32 hedge funds were bullish on The Southern Company (NYSE:SO). This number increased from the last quarter when 25 funds had invested in the stock. Steve Cohen’s Point72 Asset Management is the leading position holder in the company, with 2.26 million shares valued at $158.81 million.

In addition to Canadian National Railway Company (NYSE:CNI), Westinghouse Air Brake Technologies Corporation (NYSE:WAB), and Parker-Hannifin Corporation (NYSE:PH), The Southern Company (NYSE:SO) is one of the best infrastructure stocks to consider.

6. FlexShares STOXX Global Broad Infrastructure Index Fund (NYSE:NFRA)

5-Year Performance as of September 25: 6.71%

The FlexShares STOXX Global Broad Infrastructure Index Fund (NYSE:NFRA) is one of the best infrastructure ETFs to watch. It seeks to achieve results that align with the price and yield performance of the STOXX Global Broad Infrastructure Index. The fund was introduced on October 8, 2013. As of September 25, 2023, the fund holds net assets worth $2.13 billion and maintains a net expense ratio of 0.47%. Its portfolio consists of 212 stocks.

Canadian National Railway Company (NYSE:CNI) is one of the top holdings of the FlexShares STOXX Global Broad Infrastructure Index Fund (NYSE:NFRA). Canadian National Railway Company (NYSE:CNI), along with its subsidiary companies, is involved in rail and associated transportation activities. It also offers trucking services. Additionally, Canadian National Railway Company (NYSE:CNI) caters to industries including automotive, coal, fertilizers, temperature-sensitive cargo, forest products, oversized shipments, grain, metal and minerals, petroleum and chemicals, as well as consumer goods. The company manages a network of trains in Canada and the United States.

According to Insider Monkey’s second quarter database, 38 hedge funds were bullish on Canadian National Railway Company (NYSE:CNI), compared to 39 funds in the previous quarter. Bill & Melinda Gates Foundation Trust held the largest position in the company, with 54.83 million shares worth $6.64 billion.

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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Disclosure: None. 10 Best Infrastructure ETFs is originally published on Insider Monkey.