Under the Hood of NFRA, FlexShares’ Popular Infrastructure ETF | ETF Trends

The FlexShares STOXX Global Broad Infrastructure Index Fund (NFRA) has been FlexShares’ most popular ETF for the past two months, as measured by monthly net inflows. 

The fund accreted $104 million in net inflows last month and saw $100 million in net inflows in June. NFRA has $2.8 billion in assets under management and charges a 47 basis point expense ratio. 

Investors favor infrastructure investments for their ability to hedge inflation while boosting returns and income, according to VettaFi. Infrastructure issuers tend to have predictable cash flows, as they provide essential services used in all economic environments. Infrastructure stocks carry both equity and interest rate exposure and can provide an alternative source of income, according to FlexShares.

The term infrastructure refers to fundamental facilities and systems that serve a city, an area, or a country. Infrastructure assets are mission-critical capital projects that move people, energy, goods, and data and earn fees for their use through contracts and concessions, according to FlexShares. Some examples of traditional infrastructure projects are bridges, tunnels, toll roads, airports, pipelines, and electric, gas, water, and sewage utilities.

NFRA seeks investment results that generally correspond to the price and yield performance of the STOXX Global Broad Infrastructure Index. The market cap-weighted index invests in companies that derive at least 50% of their revenues from segments including energy, communications, utilities, transportation, and — in an unusual twist — government outsourcing, like hospitals, prisons, and postal services. 

To maintain diversification, the index imposes certain constraints, such as limits on the overall weighting of each segment. The portfolio is dominated by North American equities, followed by Japan, Australia, and the U.K.

Top holdings include Canadian National Railway, Canadian Pacific Railway, Verizon Communications, Enbridge Inc, and Comcast Corporation. The fund’s holdings span all market capitalizations, tilting more heavily than the category average toward large-cap companies.

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