Think Infrastructure Investing is Hard to Access? Not With “NFRA”

The creation of exchange-traded funds (ETFs) has given investors access to an infrastructure industry that was once more difficult to access with funds like the FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA).

Per its fund description, NFRA seeks investment results that generally correspond to the price and yield performance, before fees and expenses, of the STOXX® Global Broad Infrastructure Index. The index reflects the performance of a selection of companies that, in aggregate, offer broad exposure to publicly traded developed- and emerging-market infrastructure companies, including U.S. companies, as defined by STOXX Ltd. pursuant to its index methodology.

“Infrastructure was once only accessible to accredited institutional investors as a direct, private investment, but these assets have evolved such that they’re now available as publicly-traded listed securities,” a FlexShares blog post noted. “For example, airports, seaports, cellular tower networks, fiber optic and cable networks around the globe are all accessible as publicly traded companies. This gives investors easier access and greater liquidity than private investments. And an ETF structure like our FlexShares STOXX® Global Broad Infrastructure Index Fund (NFRA) offers operational ease and transparency, with its global infrastructure equity holdings published on a daily basis.”

“NFRA tracks an index with a unique methodology that ensures diversification across the global infrastructure equity market,” the blog post added. “As such, the ETF is constructed with the entire infrastructure complex in mind—extending beyond just glorified utilities and transportation.”

Diversification is Key

Adding infrastructure exposure is enhanced when diversification within its industry exists. NFRA does just that, giving ETF investors access to corners of the market they may not have been able to obtain via traditional investing means.

“Diversification is key for all asset classes, but even more so for infrastructure, as each of these assets tends to be associated with its own unique risks,” the FlexShares post said further. “These could include regulatory and government regimes change risk, or natural disaster risk—particularly given infrastructure’s capital-intensive and location-specific nature.”

“The onset of the pandemic further underscored the importance of diversifying within infrastructure, dealing a sharp blow to some infrastructure sectors while others thrived,” the post added. “And it’s important to keep in mind that diversification is not only possible across different infrastructure sectors, but also across geographies, patronage, and sources of revenue streams.”

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