Top Canadian Infrastructure ETFs to Buy in December 2024

ByDan Kent Published On:

Exchange-traded funds, or ETFs, have become super popular lately. They offer investors hassle-free access to a particular industry, investment strategy, or market sector with just one click. Plus, ETFs help dodge the risks of picking individual stocks and making bad choices. Check out some of the top Canadian infrastructure ETFs that might be perfect for your portfolio.

The top Canadian infrastructure ETFs to be looking at right now

  • BMO Global Infrastructure Index ETF (TSE:ZGI)
  • iShares Global Infrastructure Index ETF (TSE:CIF)
  • TD Active Global Infrastructure ETF (TINF.TO)
  • AGFiQ Global Infrastructure ETF (QIF.NO)

BMO Global Infrastructure Index ETF (TSE:ZGI)

The BMO Global Infrastructure Index ETF (TSE:ZGI) aims to track its benchmark, the Dow Jones Brookfield Global Infrastructure North American Index. As a result, this ETF has exposure to some of the world’s largest infrastructure companies. This fund has assets under management of just under $600M at the time of writing. It is a reasonably popular ETF that has put up exceptional returns over the last decade, which we will get to in a bit.

In terms of holdings, the fund contains just shy of 50 companies. It has a couple of popular Canadian companies in the top 10: Enbridge and TC Energy. It makes complete sense for an infrastructure ETF to contain some of North America’s largest blue-chip pipeline companies. Its largest holding at the time of writing is American Tower Corporation, which owns and operates nearly a quarter million cell phone towers globally.

But it isn’t the only tower exposure in the fund. The third largest holding is Crown Castle Inc, a smaller tower company. The fund is relatively balanced, with around 40% utility exposure, 37% energy exposure, and 23% real estate exposure. In terms of performance, it has posted historical annual returns in the double digits spanning a decade.

Keep in mind much of its performance comes from economic booms. A clear example of this would be the 25%+ returns it put up during the economic boom in 2013/2014.ZGI pays a modest dividend that yields in the high 2% range at the time of writing.

iShares Global Infrastructure Index ETF (TSE:CIF)

The iShares Global Infrastructure Index ETF (TSE:CIF) is similar to the BMO variant in that it is an index fund. However, they track different benchmarks, and as such, they have different holdings.

CIF tracks the Manulife Investment Management Global Infrastructure Index. The index tracks companies around the globe involved in infrastructure.

In terms of holdings,  we see many more Canadian companies involved in CIF. Despite this being a global infrastructure ETF, 4 of the top 10 holdings are Canadian companies in Gibson Energy, Stantec, Capital Power, and Transalta Corp.

The 3 largest holdings are heavy infrastructure and pipelines in the United States in Sterling, ONEOK, and Quanta Services. The fund has a management expense ratio of 0.73%, meaning you’ll pay $7.30 for every $1000 you invest on an annual basis. The fund is on the smaller side, with assets under management of $300M~ at the time of writing.

It yields in the mid-2 % range. On a performance level, it has been similar to BMO’s infrastructure ETF, with total returns in the double digits annually for over a decade. But it’s essential to keep in mind that the overall makeup of these funds is different. For example, while BMO’s is balanced across 3 industries, CIF has a nearly 50% allocation to the utility sector and almost 36% to industrials.

TD Active Global Infrastructure ETF (TINF.TO)

As the name suggests, the TD Active Global Infrastructure ETF (TINF.TO) is an actively managed ETF that aims to invest in companies that own or operate infrastructure assets and developments across the globe. The fund is small, with assets under management of just under $100M at the time of writing. However, it’s also been around the shortest, with an inception date midway through 2020. It has management fees of $7.30 per $1000 invested.

In terms of holdings, it is much like any other ETF on this list and contains nearly 50 positions. However, it does not have much exposure to Canadian infrastructure companies as the only Canadian company in the top 10 is Enbridge, coming in 2nd.

The top holding in the portfolio is one of the largest utilities in the United States, NextEra Energy. This fund is well balanced, with around 40% exposure to utilities, 23% energy, and 37% to industrials. The vast majority of the companies in this fund are large-cap and blue-chip.

It also has one of the highest dividends on this list, with a nearly 3% dividend yield at the time of writing. In terms of performance, it is tough to measure because the fund does not have much history. When we look at one-year annualized returns, they sit around 9.9%. Unlike other funds on this list with a history of a decade or longer, I expect this fund’s annualized returns to fluctuate significantly as it establishes itself.

Overall, if you’re a stickler for big bank funds or you want to see what an actively managed fund can do for your portfolio, this one is certainly worth looking at.

AGFiQ Global Infrastructure ETF (QIF.NO)

AGF is relatively unknown in the ETF world. This is why this infrastructure fund is so unique. The CGFiQ Global Infrastructure fund trades on the Neo Exchange, one of the fastest up-and-coming exchanges in Canada. You’d figure because of this, assets would be low.

However, it is a sizable fund considering its short history and the fact it trades on the Neo. At the time of writing, assets under management come in a just under $280M.AGFiQ Global Infrastructure ETF (QIF.NO) is also an actively managed fund that does not track any index in particular. Instead, the ETF uses a quantitative, multi-factor model to evaluate equity securities of global issuers in the infrastructure industry.

The quantitative model evaluates and ranks global equity securities based on factors that identify growth, value, quality, and risk characteristics. This fund has lagged behind its peers but put up relatively strong returns in 2019 and 2021. It hasn’t been around for long, debuting in 2019, so performance can’t be measured with much efficiency, especially when comparing it to the BMO or iShares funds.

Enbridge is the fund’s top holding, followed by well-known American companies American Tower Corp, Kinder Morgan, ONEOK, and Crown Castle. It has the lowest management fee on this list, coming in at only $4.50 per $1000 invested. However, the low fees have meant little, as the fund has underperformed its peers.

This is certainly one you’d want to add to your watchlist and keep an eye on for performance moving forward to see if their model produces strong results over the long term.

Why infrastructure ETFs?

If you believe in a growing economy over the long term, infrastructure expansion is at the backbone of it. Buildings, roads, power poles, sewage, water, telecommunications, and data. These are key to economic growth and are the backbone of infrastructure companies. As the global population increases and more advanced technology is demanded, you can no doubt see the bullish case for investing in infrastructure stocks.

Trillions of dollars are expected to be spent over the next few years. Many Canadians don’t know which individual stocks to choose, so they gravitate toward Canadian ETFs. This is an entirely reasonable strategy. We can access many different markets and industries using ETFs, such as Dow Jones ETFs.

Unfortunately, there is no such thing as a “Canadian infrastructure ETF,” but there are global Canadian listed options

We have plenty of Canadian-listed infrastructure ETFs on the TSX (and even the Neo). But, there are not enough Canadian stocks in the infrastructure sector to warrant an infrastructure ETF that focuses on Canada. However, there are plenty of ETFs that focus on global infrastructure and/or US infrastructure. Let’s go over some of the top infrastructure ETFs to buy today.

Overall, these Canadian-listed infrastructure funds should give you strong exposure

Infrastructure stocks have recently struggled due to rising interest rates and the fears of a recession. However, these turbulent times will undoubtedly end. Governments will be gearing up to rapidly expand telecommunications, building, and energy infrastructure when they do.

If you want a piece of the pie when that happens, plus to gain access to a reasonable mid-2% yielding dividend in the meantime for most of these funds, they are definitely worth a look. If you’re looking for a particular investment that is more defensive, the large-cap nature and stability of most of the holdings inside these funds will likely lead to low volatility.

As a bonus, there is a chance your brokerage commissions will be $0 when buying these ETFs. Check with your brokerage to see if these infrastructure ETFs are on their commission-free lists.

A final note, make sure to factor in income tax

As most of these funds are Canadian listed but contain individual US holdings, you can be subject to taxes even inside a tax-sheltered account like an RRSP. It is critical to consider your individual tax situation before investing in these ETFs. Taxes can vary depending on the fund’s investment strategy and distribution structure. Speak to an accountant if you have questions.