This week, investors welcomed a new ETF from Guggenheim, which offers access to some of the most stable and high-yielding industries on the market. Below, we outline everything you need to know about the new S&P High Income Infrastructure ETF (GHII ).
Targeting Yield In Global Infrastructure
Making its debut on Wednesday, the S&P High Income Infrastructure ETF (GHII) offers exposure to infrastructure assets, which provide essential services to economies around the world. By its nature, infrastructure assets operate in an environment of limited competition as a result of natural monopolies, government regulations or concessions. Consequently, these companies rake in substantial and stable cash flows, which are then returned to shareholders via dividends.
For investors looking to boost current income, while at the same time maintaining a relatively low risk profile, this corner of the market may be a compelling buy.
Under the Hood of GHII
GHII tracks an index that is designed to measure and monitor the performance of 50 high-yielding global equity securities of companies that engage in various infrastructure-related sub-industries, such as energy, transportation, and utilities sectors. To be included in the index, constituents must meet size, listing and liquidity requirements, and must also be part of the S&P Global BMI Index, which is a rules-based index that measures global stock market performance.
Unlike most ETFs, GHII’s underlying index weights its components based on 12-month trailing dividend yield instead of by market capitalization.
The resulting portfolio consists of 50 individual securities. Roughly half of GHII’s total assets are allocated to utilities, while industrials receive about 30%, and energy roughly 16%.
In terms of geographic diversity, GHII allocates the following to securities in these countries (as of 2/6/2015):
- U.S. (20%)
- Australia (14%)
- China (9%)
- Spain (8%)
- Italy (8%)
Equities from Britain, Canada, Singapore, and France are also given meaningful allocations.
The S&P High Income Infrastructure ETF (GHII ) charges an expense ratio of 0.45%, which is slightly cheaper than its competitor – the iShares Global Infrastructure ETF (IGF ), which charges 0.47%.
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Disclosure: No positions at time of writing.