Daily ETF Watch: Infrastructure Fund Debuts

February 11, 2015

Guggenheim Investments today is rolling out an infrastructure ETF with a twist that is designed to appeal to investors in search of income.

 

Infrastructure is already an area that tends to have a higher yield than other equities, but the underlying index of the Guggenheim S&P High Income Infrastructure ETF (GHII) also selects its components based on their 12-month trailing yield and then weights them by their yields.

 

The 50 components are selected from the utilities, transportation and energy sectors. Guggenheim noted in an information sheet that the index is weighted more heavily to the utilities space than the comparable cap-weighted S&P Global Infrastructure Index.

 

Potential components must have a float-adjusted market capitalization of at least $250 million and be listed on a developed-market stock exchange.

 

GHII comes with an expense ratio of 0.45 percent; that’s cheaper than the dominant fund in the space, the iShares Global Infrastructure ETF (IGF | B-57), which charges 0.48 percent. IGF tracks the S&P Global Infrastructure ETF and has roughly $1.2 billion in assets under management.

 

Interestingly, the same index underlies the SPDR S&P Global Infrastructure ETF (GII | B-57), which has only $111.5 million in AUM even though it has an expense ratio of 0.40 percent.

 

The FlexShares Stoxx Global Broad Infrastructure ETF (NFRA | B-43), the second-largest fund in the space, also has just a fraction of IGF’s assets, at $294 million and a 0.47 percent expense ratio. It’s more diversified than any of the other funds, including GHII, holding a portfolio of nearly 160 stocks. IGF and GII each have just 75 holdings.

 

With its yield-focused index methodology, GHII could command investors’ attention, especially considering that anyone looking to invest in infrastructure is generally looking at the asset class for its higher income levels.

 

Morgan Stanley Closes BARL

With very little fanfare, UBS has shut down one of its funds. The Morgan Stanley S&P 500 Oil Hedged ETN (BARL) ceased trading on Jan. 29.

 

The note, which tracked a benchmark combining the returns of the S&P 500 and oil futures, had less than $10 million in assets and had failed to catch on with investors. According to an ETF.com analyst, “trading volume [was] essentially non-existent.”

 

Morgan Stanley’s only other ETN is the Morgan Stanley Cushing MLP High Income ETN (MLPY), which covers high-yielding master limited partnerships. Unlike BARL, MLPY is quite successful for an MLP, with $106 million in assets; however, ETF.com still warns about the product’s low liquidity levels.

 

Find your next ETF

Reset All