If AI is the defining megatrend of markets right now, electrification is the engine driving it forward. Data centers are showing huge demand for electricity, but they aren’t alone; numerous key segments are creating a massive need for electricity. That presents major opportunities for investors if they know where to look. The electrification ETF ELFY can provide one powerful option to play that trend.
See more: Extreme Heat & AI Demand Drive ELFY Surge
ELFY, the ALPS Electrification Infrastructure ETF, provides a powerful route into the space. The ETF charges a 50 basis point fee to track the Ladenburg Thalmann Electrification Infrastructure Index. The strategy equally weights its large- and midcap holdings, selected by market cap at the outset. The fund does invest in infrastructure and electricity distribution, but not exclusively. It also invests in areas like battery technology, for example.
That approach has helped the strategy return 9.9% over the last three months, according to ETF Database. That outperformed both its ETF Database Category and FactSet Segment average, at 4.9% and 7.2%, respectively. The fund has also hit $60 million in AUM as of August.
SS&C ALPS Advisors Head of Fund Sales & Strategy Paul Baiocchi recently joined ETF Prime and host Nate Geraci to discuss key ETF trends, including AI and electrification. Per Baiocchi, following years of 0.4% electricity demand growth, demand is now spiking.
“We think it’s a massive theme, and AI datacenters are a big piece of it,” Baiocchi said. “They’re driving the forecast for electricity demand growth to levels we haven’t seen since the 1960s.”
“If you look at the FERC estimates over the course of the next 5–10 years, you’re talking about, as a base case, 8% electricity demand growth annually between now and 2030,” he added. “If you add reshoring and EVs to that figure you’re talking about 15.8% growth in electricity demand.”
Looking ahead, the fund’s inclusion not only of utilities, but also copper and uranium miners, can help it get the most out of the trend for ETF investors. For those looking at thematic ETFs to help bolster portfolios, the electrification ETF ELFY merits consideration.
VettaFi LLC (“VettaFi”) is the index provider for ELFY, for which it receives an index licensing 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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