The Global X Infrastructure Megatrend ETF Portfolio

In the ETF world, a megatrend is a long-term structural shift that cuts across multiple sectors, tying together companies that might seem unrelated at first glance.

What connects them is a shared theme, whether it's the type of customer they serve, the technology they rely on, or the economic transformation they support.

Infrastructure is one megatrend I think deserves more attention. It’s not just about pipelines and utilities anymore. Today’s infrastructure also includes data centers powering the digital economy, cell towers that keep us connected, and even nuclear energy firms helping decarbonize the grid. It spans old-world assets and next-gen enablers.

There are a lot of infrastructure ETFs out there, but many focus on different slices of the space. When paired together, they complement each other and help round out exposure. Here’s an idea for an infrastructure megatrend portfolio using three thematic ETFs from Global X.

Global X U.S. Infrastructure Development ETF (PAVE)

Start by allocating 50% of the portfolio to PAVE, a five-star Morningstar-rated ETF that has outperformed most of the 79 infrastructure funds tracked by the firm on a risk-adjusted basis.

The key is in the name: “infrastructure development.” PAVE focuses on the companies enabling infrastructure modernization and expansion. That includes firms involved in raw material production, heavy equipment, engineering, and construction.

Its benchmark, the Indxx U.S. Infrastructure Development Index, tracks 100 companies. About 73% of the portfolio sits in industrials and 20% in materials, which sets it apart from traditional infrastructure ETFs more focused on utilities and energy.

Top holdings include Norfolk Southern, a major freight rail operator; United Rentals, which provides the heavy equipment used on construction sites; and Fastenal, a leading distributor of industrial and construction supplies.

Unlike many infrastructure ETFs tilted toward income, PAVE leans toward growth-focused companies. That’s why its 30-day SEC yield sits at a modest 0.59%, as this allocation is more about capital appreciation than cashflow.

Global X MLP & Energy Infrastructure ETF (MLPX)

To add the more traditional side of infrastructure focused on income and cash-generating assets, allocate 25% of the portfolio to MLPX.

This allocation represents the income-generating anchor of your infrastructure exposure, offering stable tollbooth-like cashflows from energy transportation and storage assets.

MLPS is one of the better midstream energy ETFs available, charging a reasonable 0.45% expense ratio to track the Solactive MLP & Energy Infrastructure Index.

You get exposure to pipeline operators structured as both corporations and MLPs. Top names include Enbridge and Kinder Morgan on the corporate side, and MLPs like Energy Transfer and Enterprise Products Partners.

Since MLPX wraps these MLPs inside an ETF, you avoid the hassle of a Schedule K-1 and instead receive a simple T5 or 1099-DIV tax slip. The yield is solid at 4.56%, paid quarterly.

Global X Data Center & Digital Infrastructure ETF (DTCR)

With half the portfolio already allocated to infrastructure enablers and another quarter to traditional midstream energy for cash flow, the final 25% goes to innovation through DTCR.

This is one of the more underappreciated REIT ETFs in the market. It charges a 0.5% expense ratio and tracks the Solactive Data Center REITs & Digital Infrastructure Index.

DTCR holds 25 companies, primarily data center REITs like Equinix and Digital Realty Trust, which own and operate the facilities powering cloud computing and internet services. Crown Castle is also included. In addition, DTCR gives you exposure to telecom REITs like American Tower and SBA Communications, which build and maintain 5G infrastructure.

Because these REITs are more growth-oriented, their yields are lower than traditional real estate names. The fund pays a 1.74% 30-day SEC yield on a semi-annual schedule. This sleeve of the portfolio provides modern digital infrastructure exposure with a tilt toward long-term capital appreciation.

Putting it together

Here’s how a portfolio of 50% PAVE, 25% MLPX, and 25% DTCR has performed historically with annual rebalancing versus both the iShares U.S. Infrastructure ETF (IFRA) and the S&P 500 index:

The suggested 50/25/25 allocation is merely my preferred weighting based on how I see the roles of growth, income, and innovation within infrastructure. If you feel strongly about a particular segment, you can easily overweight or underweight as you see fit.

Alternatively, you can take a more passive approach and equal-weight all three ETFs with quarterly rebalancing to maintain balance without leaning too heavily in any direction.