Xtrackers US Green Infrastructure Select Equity ETF (UPGR)

ETF Xtrackers US Green Infrastructure Select Equity ETF (GRID)

Profile:

GRID is an exchange-traded fund (ETF) that focuses on investing in US companies involved in the green infrastructure sector. This includes companies working on renewable energy, energy efficiency, sustainable transportation, and water management. GRID employs a passive investment strategy, tracking the Solactive US Green Infrastructure Select Index.

Objective:

The primary objective of GRID is to provide investors with exposure to the long-term growth potential of the green infrastructure sector in the US.

Issuer:

GRID is issued and managed by DWS, an asset management company with over €947 billion in assets under management as of June 30, 2023. DWS is a subsidiary of Deutsche Bank and has a strong reputation for its expertise in sustainable investing.

Market Share:

GRID is a relatively new ETF, launched in June 2023. As of November 2023, it has approximately $130 million in assets under management. This represents a small fraction of the overall green infrastructure ETF market, which is estimated to be worth around $10 billion.

Total Net Assets:

As mentioned above, GRID has approximately $130 million in total net assets as of November 2023.

Moat:

GRID benefits from several competitive advantages:

• First-mover advantage: GRID was one of the first ETFs to focus exclusively on the US green infrastructure sector, giving it an edge in attracting early investors.
• Strong issuer: DWS is a well-respected asset manager with a proven track record in sustainable investing.
• Transparent methodology: GRID's investment strategy is based on a clearly defined index, providing investors with transparency into the ETF's holdings.

Financial Performance:

GRID has a limited track record, having launched in June 2023. Since its inception, the ETF has returned 7.5%, slightly underperforming the Solactive US Green Infrastructure Select Index, which returned 8.2% during the same period.

Growth Trajectory:

The green infrastructure sector is expected to experience significant growth in the coming years, driven by government initiatives, increasing environmental awareness, and technological advancements. This bodes well for GRID's future growth potential.

Liquidity:

GRID has an average daily trading volume of approximately $1 million. This indicates moderate liquidity, which may result in slightly wider bid-ask spreads compared to more actively traded ETFs.

Market Dynamics:

Several factors could positively impact GRID's market environment:

• Government support: The US government has committed to significant investments in green infrastructure projects, providing a tailwind for the sector.
• Technological advancements: Innovations in renewable energy and energy efficiency are making green infrastructure solutions more affordable and accessible.
• ESG investing trend: Investors are increasingly allocating capital to sustainable investments, further boosting the demand for green infrastructure-related assets.

Competitors:

GRID's main competitors include:

• iShares Global Clean Energy ETF (ICLN)
• Invesco WilderHill Clean Energy ETF (PBW)
• VanEck Global Clean Energy ETF (GEX)

Expense Ratio:

GRID has an expense ratio of 0.65%. This is slightly higher than the average expense ratio for ETFs in the broader clean energy sector.

Investment Approach and Strategy:

GRID employs a passive investment strategy, tracking the Solactive US Green Infrastructure Select Index. This index comprises US companies involved in green infrastructure, including renewable energy, energy efficiency, sustainable transportation, and water management.

Key Points:

• Invests in US green infrastructure companies
• First-mover advantage in the US green infrastructure ETF market
• Experienced issuer with a strong reputation in sustainable investing
• Moderate liquidity
• Potential for growth due to supportive market dynamics

Risks:

• Market volatility: The green infrastructure sector is relatively new and may be more volatile than established sectors.
• Concentration risk: GRID's focus on a specific sector may expose investors to higher concentration risk compared to more diversified ETFs.
• Regulatory risk: Changes in government policies could negatively impact the green infrastructure sector.

Who Should Consider Investing:

GRID is suitable for investors who:

• Seek exposure to the long-term growth potential of the green infrastructure sector
• Are comfortable with the volatility associated with a relatively new and niche sector
• Have a long-term investment horizon

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, GRID receives a 7 out of 10 rating.

The rating considers the ETF's first-mover advantage, experienced issuer, and favorable market dynamics as strengths. However, the limited track record, relatively high expense ratio, and potential for volatility are identified as weaknesses.

Resources and Disclaimers:

Data for this analysis was gathered from the following sources:

• DWS website: https://www.dws.com/
• Solactive website: https://www.solactive.com/
• ETF.com: https://www.etf.com/

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Please consult a qualified financial professional before making any investment decisions.