Infrastructure ETFs Back In Spotlight

President Biden's plans on infrastructure spending could benefit these funds.

Reviewed by: Todd Rosenbluth
Edited by: Todd Rosenbluth

Key Takeways

U.S. infrastructure spending should finally occur. In a speech last week, President-elect Joe Biden said, “It’s time to stop talking about infrastructure and to finally start building an infrastructure so we can be more competitive.”

He added that his plan “would produce millions of good-paying jobs that put Americans to work rebuilding our roads, our bridges, our ports to make them more climate-resilient, to make them faster, cheaper, cleaner to transport American-made goods across our country and around the world.”

CFRA thinks that Democratic Party control of Congress and the presidency makes it much more likely that an infrastructure bill will be passed into law. Both parties have agreed for four years that increased infrastructure is paramount, but intraparty squabbling has blocked a spending plan from being passed through all required channels.

We have identified Cleveland-Cliffs (ticker, CLF), Jacobs Engineering (J), Martin Marietta Materials (MLM), Quanta Services (PWR) and United Rentals (URI) as examples of our “Buy” or “Strong Buy” stocks poised to benefit from increased infrastructure spending following a Biden victory.

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

Investors favoring NFRA and PAVE. PAVE recently eclipsed the $1 billion assets under management mark, aided by $715 million of net inflows in the year ended Jan. 15, including over $200 million of new money to start the year, according to CFRA’s First Bridge ETF database. Meanwhile, NFRA pulled in $435 million in the past year, driving assets to $2.2 billion. In contrast, IGF had $3.1 billion of assets, hurt in part by $124 million of net outflows in the past year.

Infrastructure-Themed ETFs ($M)

Source: CFRA’s First Bridge ETF Database. As of Jan. 15, 2021

These three ETFs charge similar expense ratios, so CFRA does not think fees have been the driver of investor demand.

However, performance could be playing a role. The U.S.-focused PAVE has been outperforming the other two, especially since President’s Biden victory in November. In the last 12 months, PAVE is up 27.04%, compared with IGF’s 7.5% loss and NFRA’s scant 1.92% return.

PAVE is the lone $1 billion infrastructure ETF to focus solely on U.S companies. Infrastructure spending is a global investment theme, with companies in Canada, Europe and Japan as well as the U.S. helping developed and emerging markets improve their communications, energy, transportation and utilities buildout. PAVE not only owns U.S.-listed stocks only, but the companies inside the fund need to generate more than half of their revenues domestically. The fund’s holdings include CLF, J, MLM, PWR and URI.

Meanwhile, NFRA and IGF have just 39% and 34% of assets in U.S.-listed securities, respectively. NFRA has a higher weight in Canadian companies (16% vs. 11%), including a top position in Canadian National Railway (CNI), as well as a 10% stake in Japanese companies that are absent from IGF. In contrast, IGF derives more of its assets from Spain and Italy (approximately 8% each).

Country Exposure for Infrastructure ETFs (% of assets)

Source: CFRA’s First Bridge ETF Database. As of Jan. 15, 2021

PAVE is not alone in focusing on the U.S. In 2018, the iShares U.S. Infrastructure ETF (IFRA) launched, but the ETF recently had $160 million in assets, nearly all stemming from net inflows in the past year. Relative to PAVE, we find IFRA is more diversified at the security level, with its largest position just 1.6% of assets, less than half that of PAVE. However, IFRA gained 11% last year compared with PAVE’s 27%.


As the Biden administration prioritizes rebuilding infrastructure, investors have a variety of ETFs to consider. While PAVE, NFRA and IFRA have been incurring net inflows in contrast to IGF, we think it is important to understand what is inside to ascertain the risk and reward attributes for 2021.

All of the views expressed in this research report accurately reflect the research analyst’s personal views regarding any and all of the subject securities or issuers. No part of the analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. For more information and disclosures, please refer to CFRA’s Legal Notice at

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Todd Rosenbluth is director of ETF and mutual fund research at CFRA, an independent research firm that acquired S&P Global Market Intelligence’s equity and fund business in October 2016. Follow him at @ToddCFRA.