2025 is poised to be another year in which ETF launches break records or come close to doing so. So advisors and investors have an understandably difficult time in assessing which rookie funds have long-term staying power. That’s particularly true when it comes to thematic ETFs. That’s because investors can be fickle. What looks like a glamorous theme today can be glossed over tomorrow. That’s a fate unlikely to befall the ALPS Electrification Infrastructure ETF (ELFY).
The fund came to market in April. And it could be an example of a new ETF that’s at the right place at the right time. That’s an attribute that could pave the way for long-term relevance.
The thesis pertaining to ELFY’s long-haul viability is simple, which alone could increase its potency. A slew of next-generation industries and technologies, including AI and EVs, rely on reliable power sources. Those sources and the related infrastructure need to be refreshed. And those updates could result in massive expenditures that power ELFY holdings going forward.
ELFY at Epicenter of Megatrends
Additive to the case for ELFY is that while renewable energy has made significant strides, global energy consumption is still fossil-fuels-intensive. That’s something plenty of companies and governments are attempting to change. The latter is committing significantly to accomplishing that objective. That transition will be costly, potentially benefiting ELFY member firms along the way.
“In order to transition away from fossil fuels, the coordinated development of all steps of the energy value chain is needed. Developing energy scenarios, including demand projections and planning of power generation capacity and enabling infrastructure, is a crucial starting point,” noted the World Economic Forum (WEF).
Relevant to investors considering ELFY is the forum’s estimate that just last year, “global investment in clean energy and infrastructure” reached $2 trillion. Over the prior decade, related spending ranged from $300 billion to $400 billion annually. The International Energy Agency has forecasting a doubling of those figures by 2030.
Prospective ELFY investors are right to ponder how ambitious electrification infrastructure goals will be reached in financial terms. That’s where alternative financing comes in. And growth on that front could augur well for ELFY holdings.
“Meanwhile, an increasing number of utilities across the world are exploring a larger spectrum of alternative financing models – from full public financing to full privatization, including merchant lines, minority private participation in the equity of a transmission project, as well as public-private partnerships (PPP),” added the WEF.
VettaFi LLC (“VettaFi”) is the index administrator and calculation agent for ELFY, for which it receives a fee. However, ELFY is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of ELFY.
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