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Should You Invest in the Global X U.S. Infrastructure Development ETF (PAVE)?

Designed to provide broad exposure to the Utilities - Infrastructure segment of the equity market, the Global X U.S. Infrastructure Development ETF (PAVE) is a passively managed exchange traded fund launched on 03/06/2017.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Infrastructure is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.

Index Details

The fund is sponsored by Global X Management. It has amassed assets over $439.59 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Infrastructure segment of the equity market. PAVE seeks to match the performance of the INDXX U.S. Infrastructure Development Index before fees and expenses.

The INDXX U.S. Infrastructure Development Index measure the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.47%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.50%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 70.70% of the portfolio. Materials and Information Technology round out the top three.

Looking at individual holdings, Fastenal Co (FAST) accounts for about 4.23% of total assets, followed by Rockwell Automation Inc (ROK) and United Rentals Inc (URI).

The top 10 holdings account for about 34.16% of total assets under management.

Performance and Risk

The ETF has added about 3.92% so far this year and was up about 6.74% in the last one year (as of 11/08/2020). In that past 52-week period, it has traded between $10.02 and $18.62.

The ETF has a beta of 1.28 and standard deviation of 30.23% for the trailing three-year period. With about 94 holdings, it effectively diversifies company-specific risk.

Alternatives

Global X U.S. Infrastructure Development ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PAVE is a sufficient option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.

SPDR SP Global Infrastructure ETF (GII) tracks S&P Global Infrastructure Index and the iShares Global Infrastructure ETF (IGF) tracks S&P Global Infrastructure Index. SPDR SP Global Infrastructure ETF has $350.13 million in assets, iShares Global Infrastructure ETF has $2.91 billion. GII has an expense ratio of 0.40% and IGF charges 0.46%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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Global X U.S. Infrastructure Development ETF (PAVE): ETF Research Reports
 
Fastenal Company (FAST): Free Stock Analysis Report
 
Rockwell Automation, Inc. (ROK): Free Stock Analysis Report
 
iShares Global Infrastructure ETF (IGF): ETF Research Reports
 
United Rentals, Inc. (URI): Free Stock Analysis Report
 
SPDR SP Global Infrastructure ETF (GII): ETF Research Reports
 
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