As Congress moves to make the final votes on the $1 trillion bipartisan infrastructure bill this week, investors looking to gain exposure to that extraordinary amount of spending might want to consider adding an infrastructure-focused exchange-traded fund (ETF) to their portfolio.
Infrastructure ETFs seek to provide exposure to companies that build and maintain major projects and systems, like roads, bridges, water resources, railways, communication networks, and electricity networks. The bipartisan infrastructure bill includes measures for upgrading the nation's transportation (primarily highways and airports), broadband, waterworks, and cybersecurity systems.
Here are some infrastructure ETFs to consider as Congress finalizes the plan:
iShares U.S. Infrastructure ETF (NYSE: IFRA)
IFRA tracks the NYSE FactSet U.S. Infrastructure Index, which is comprised of U.S. companies that benefit from increased infrastructure activity. The fund's largest exposure is in the utilities sector, followed by industrials and materials. IFRA's top three holdings are solar energy company Sunnova Energy International (NYSE: NOVA), water utility company Middlesex Water Company (NASDAQ: MSEX), and energy company NRG Energy (NYSE: NRG). The fund is up 50% year-to-date and carries an expense ratio of 0.40%.
Global X Funds Global X U.S. Infrastructure Development ETF (NYSE: PAVE)
PAVE seeks to provide exposure to U.S. infrastructure company that provide raw materials, heavy equipment, engineering and construction. The majority of the fund's holdings are within the industrials sector, followed by materials. PAVE's top three holdings are steel producer Nucor Corp. (NYSE: NUE), industrial manufacturing company Trane Technologies (NYSE: TT), and power management company Eaton Corp. (NYSE: ETN). The fund is up more than 67% for the year, and carries an expense ratio of 0.47%.
Invesco Water Resources ETF (NASDAQ: PHO)
PHO invests in companies that create products designed to conserve and purify water for both residential and business properties. The fund's holdings are mainly in the industrial sector, followed by utilities and healthcare. PHO's top three holdings are laboratory instrument and software company Waters Corp. (NYSE: WAT), conglomerate company Danaher Corp (NYSE: DHR) and public utility company American Water Works Co. (NYSE: AWK). The fund is up more than 23% for the year, and carries an expense ratio of 0.60%.
Defiance Next Gen Connectivity ETF (NYSE: FIVG)
FIVG is a pure-play fund that seeks to provide exposure to the carrier-grade internet market, including cellular antenna and routers, mobile network operators, satellite-based communications, and other areas of internet connectivity. The fund's holdings are mostly in the information technology sector, followed by communication services. FIVG's top three holdings are the chipmakers Advanced Micro Devices (NASDAQ: AMD), Qualcomm (NASDAQ: QCOM), and Analog Devices (NASDAQ: ADI). The fund is up 15% for the year and carries an expense ratio of 0.30%.
First Trust NASDAQ Cybersecurity ETF (NASDAQ: CIBR)
CIBR is a growth fund that targets U.S.-listed stocks within the information technology and industrial sectors that are classified as a cybersecurity company by the Consumer Technology Association, have a minimum market cap of $250 million, and meet other liquidity requirements. The fund's top three holdings are telecom and networking hardware and software company Cisco Systems (NASDAQ: CSCO), technology consulting services provider Accenture (NYSE: ACN) and cybersecurity company CrowdStrike (NASDAQ: CRWD). The fund is up nearly 43% for the year and carries an expense ratio of 0.60%.