ETF Spotlight on the FlexShares STOXX Global Broad Infrastructure Index Fund (NYSEArca: NFRA), part of an ongoing series.
Assets: $26.6 million
Objective: The FlexShares STOXX Global Broad Infrastructure Index Fund tries to reflect the performance of the STOXX Global Broad Infrastructure Index, which is comprised of a global portfolio of infrastructure stocks.
Holdings: Top holdings include Vodafone (NasdaqGS: VOD) 4.0%, AT&T (NYSE: T) 4.0%, Union Pacific (NYSE: UNP) 2.7%, Canadian National railway Co. (TSE: CNR) 3.2% and Verizon Communications (NYSE: VZ) 3.1%.
What You Should Know:
- Northern Trust’s FlexShares sponsors the fund.
- NFRA has a 0.47% expense ratio.
- The ETF has 153 holdings, and the top ten components make up 29.6% of the overall allocations.
- Market capitalization break down includes mega-caps 45.4%, large-caps 40.9%, mid-caps 13.1% and small-caps 0.6%.
- Sector allocations include energy 30.5%, communication 29.6%, transportation 26.3%, government outsourcing/social 6.9% and utilities 6.7%.
- Country allocations include U.S. 40.8%, U.K. 10.7%, Canada 10.3%, Japan 10.0%, Germany 6.5%, Australia 4.2%, Spain 3.6%, France 2.6%, China 2.3% and Italy 2.2%.
- The fund began trading Oct. 8, 2013.
- NFRA is up 0.3% since its inception but down 3.6% year-to-date.
- “Infrastructure companies offer investors a defensive exposure with a low historical correlation to other global equities, and potential income generation benefits,” according to FlexShares.
- The ETF includes traditional utility, energy and transportation subsectors of the infrastructure category, along with communications and government outsourcing/social infrastructure, which should help further diversify the portfolio.
- Infrastructure spending depends on local economic growth and government fiscal spending.
- The sector is typically seen to offer a stable and predictable cash flow over the long-term.
Next page: The latest news
The Latest News:
- According to the Organization for Economic Cooperation and Development, over $50 trillion is needed to finance transport, power, water and telecommunications infrastructure between now and 2030, or 60% more than what was spent over the last two decades, reports Douglas L. Peterson for Forbes.
- However, governments are cutting back as they put their finances in order and reduce outstanding deficits.
- S&P calculates that the annual gap between investment needs and public funding will be $500 billion per year over the next 15 years.
- In the recent State of the Union speech, President Barack Obama touched upon how savings from the tax reform can be reinvested to improve the country’s infrastructure.
- FlexShares STOXX Global Broad Infrastructure Index Fund
Financial advisors interested in learning more about the infrastructure sector can register for the upcoming webcast, Capturing the Promise of Infrastructure ETFs, scheduled for Feb. 11.
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.