BlackRock has launched a new ETF on Cboe ETF Marketplace: the iShares US Infrastructure ETF (IFRA US).
IFRA provides exposure to companies owning and operating infrastructure as well as construction companies engaged in infrastructure development.
The ETF tracks the NYSE FactSet US Infrastructure Index, a FactSet-powered index calculated by NYSE.
The index is composed of equities from two groups of infrastructure companies: owners and operators, such as railroads and utilities; and enablers, such as materials and construction companies.
Each group is equally weighted within the portfolio, while the constituents within each group are weighted by market cap. Utilities and industrials represent the highest weightings by sector at 41.6% and 30.0% respectively.
The index has 161 constituents and is well diversified with the largest (Portlatchdeltic) accounting for just 1.2%.
The fund has an expense ratio of 40bps.
Infrastructure companies tend to generate a steady source of income which is less sensitive to short-term market cycles as projects are usually long-term in nature. Contract revenues are also often linked to inflation which makes the company’s stocks less sensitive to the effects of rising price levels. In addition, household use of electricity, gas and water is relatively constant and provides a regular source of revenue.
BlackRock already has two other iShares infrastructure ETFs: the iShares Global Infrastructure ETF (IGF US) and the iShares EM Infrastructure ETF (EMIF US).
IGF was launched in December 2007 and is listed on Nasdaq Exchange. It tracks the S&P Global Infrastructure Index, providing investors with exposure to companies that provide transportation, communication, water, and electricity services from around the world. It has AUM of $2.5bn and an expense ratio of 48bps.
EMIF was launched in June 2009 and also listed on Nasdaq. It tracks the S&P Emerging Markets Infrastructure Index, providing investors with exposure to 30 of the largest EM equities in the infrastructure industry. It has AUM of $40.8m and a expense ratio of 74bps.
These funds are also available in Europe under ticker codes INFR LN and IEMI LN.