The Best Infrastructure ETFs to Buy

Most institutional investors – whether pension funds, sovereign wealth funds or endowments – don't stick to the traditional stock-and-bond portfolios favored by retail investors.

There is no 60-40 portfolio rule in operation here. Instead, their allocations often include a sizable mix of alternative investments and real assets. While real estate is one well-known example, infrastructure has emerged as another critical pillar.

Infrastructure isn't one of the 11 official Global Industry Classification Standard (GICS) sectors. But it has gained increasing attention in recent years, particularly in the U.S. The 2021 passage of the bipartisan Infrastructure Investment and Jobs Act (IIJA) helped push the theme into the spotlight.

The legislation authorized $1.2 trillion in federal spending on roads, bridges, passenger rail, broadband internet, airports, ports and electrical grid modernization, driving renewed investor focus on infrastructure-linked investments.

What is infrastructure?

There's no single definition of infrastructure, but it's generally understood in two ways.

The first view defines infrastructure as an asset class: investments that own essential physical systems or facilities that provide services critical to the functioning of society and the economy.

Classic examples include power lines, pipelines, roads, railways and water utilities. In recent years, as connectivity and technology have evolved, this definition has expanded to include assets such as cell towers and data centers, both critical to modern communication and information flow.

The second view focuses on investment characteristics. Infrastructure assets are often described as those that produce reliable, steady cash flows from tollbooth-like business models built around their physical footprint.

Think of a pipeline that charges producers to transport oil, a private water utility that bills monthly for service, or a railroad that controls exclusive freight routes. Many of these businesses operate in oligopolies or regulated environments, which limits competition and enhances pricing power.

Taken together, infrastructure is essential services backed by hard assets that deliver stable and predictable income, often through long-term contracts or regulated pricing models. These cash flows typically include built-in escalators that help offset inflation, such as utility rate adjustments or inflation-indexed service agreements.

How can you invest in infrastructure?

Accessing infrastructure assets depends heavily on the type of investor.

Institutional investors often make direct investments in large-scale infrastructure projects. For example, a national pension fund might fund the expansion of an airport terminal or invest directly in a toll road concession via bonds or buying shares.

Retail investors, on the other hand, can access infrastructure more easily through publicly traded securities.

Many infrastructure operators – such as Enbridge (ENB) and Kinder Morgan (KMI) in pipelines, American Water Works (AWK) in wastewater utilities, and Class I railroads such as Union Pacific (UNP) and Canada Pacific Kansas City (CP) – are listed on major stock exchanges.

The challenge, as always, is diversification.

Infrastructure spans multiple sectors, including utilities, energy, industrials, and materials, and increasingly overlaps with real estate, communications, and tech.

Trying to build a diversified infrastructure portfolio from individual stocks can quickly become overwhelming.

To address this, asset managers have launched infrastructure indexes and exchange-traded funds (ETFs) that track them.

These products use transparent, rules-based methodologies to define what qualifies as infrastructure, set portfolio weights, and manage risk.

For retail investors, infrastructure ETFs offer diversified exposure, competitive fees, and the same ease of trading as any other stock.

How we picked the best infrastructure ETFs

We began by screening out actively managed infrastructure ETFs.

Following an index helps keep fees lower, since there's no need to pay a portfolio management team, just index licensing and basic operational costs.

That led us to our first core filter: a reasonable expense ratio of 0.50% or lower.

Infrastructure ETFs are generally more expensive than broad equity funds, especially if they focus on narrower niches, but even within this category, there's a wide range between cost-effective and overpriced options.

Next, we prioritized ETFs with sufficient assets under management (AUM) to ensure long-term viability.

While low AUM doesn't necessarily create liquidity issues, it does increase the risk of fund closure, which can be a headache for investors. We set a high bar of $500 million in AUM to sharply reduce that risk and focus only on funds with meaningful scale and staying power.

Finally, because infrastructure ETFs are typically used as core, long-term portfolio allocations rather than tactical trading tools, we didn't weigh liquidity (like 30-day median bid-ask spreads) as heavily.

This is an asset class meant to complement stocks and bonds with steady income and inflation-linked returns, not serve as a vehicle for short-term speculation.

Data is as of August 11.