Smart Time For Smart Grid ETFs?

For the first time since 1960, Americans are spending more on electricity than they are on gasoline, a once-moonshot goal of environmental activists that was accomplished mostly by the black swan twist of fate called COVID-19.

Nathaniel Bullard at Bloomberg reported that by the end of this summer, Americans' personal expenditure on electricity was outpacing the money they spent on gasoline and diesel fuel. That was largely driven by lockdowns and business/school closures: With nowhere to go, there was obviously no need to drive cars and consume gasoline.

At the same time, stay-at-home Americans shifted their electricity consumption from their workplaces and schools to their residential power grid.

Should the trend hold—as it very well might, as the pandemic continues with no vaccine in sight—that could finally push the country toward more electric-friendly infrastructure, setting up ETFs that invest in so-called smart grid stocks.

Smart Cars Vs. Smart Grid ETFs

Those with their eyes on an electric future have a few options for exposure.

There is no shortage of electric vehicle ETFs: the $50 million Global X Autonomous & Electric Vehicles ETF (DRIV); the $43 million iShares Self-Driving EV and Tech ETF (IDRV); and the $30 million KraneShares Electric Vehicles and Future Mobility Index ETF (KARS), just to name a few.

However, electric vehicles are but a single segment of what needs to be a much larger shift in the country's infrastructure. Moving from gasoline to electric power wouldn't simply impact transportation, but also utilities and power generation facilities; real estate and construction; as well as industrial supply chains and production.

Of the 12 infrastructure ETFs on the market, only two specifically track next-gen infrastructure: the $57 million First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) and the $8 million SPDR S&P Kensho Intelligent Structures ETF (SIMS).

While both are global ETFs and track roughly the same sector breakdown, GRID tilts more toward international equities, while SIMS favors U.S. exposure.

That appears to have made all the difference, as GRID has risen 30% over the past 12 months, while SIMS has only risen 10%.

Source: ETFAction, data as of Oct. 1, 2020

That said, SIMS is much cheaper than GRID, with an expense ratio of 0.45% compared with GRID's 0.70%.

(To see a full comparison of GRID versus SIMS, visit our ETF Comparison Tool.)

Nonpure-Plays Abound

There are a few ETFs with nonpure-play exposure to electric infrastructure companies as well. For example, the $121 million ALPS Disruptive Technologies ETF (DTEC) counts the smart grid as one of 10 main disruptive themes it tracks.

Meanwhile, the $536 million First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) and the $391 million ALPS Clean Energy ETF (ACES) fold smart grid stocks under the umbrella of bigger themes—in QCLN's case, "energy intelligence"; in ACES' case, "clean technology."

In addition, the highly thematic SmartETFs Smart Transportation & Technology ETF (MOTO) tracks companies developing safer, cleaner and more connected transportation systems (not just electric cars), so there is a lot of crossover with smart grid technology.

Launched late last year, MOTO has $3 million in assets.

Contact Lara Crigger at [email protected]