NOVEMBER 2025
Providing Targeted Exposure to Global Electricity Grid Modernisation: the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF
Electricity infrastructure sits at the heart of the global economy, yet much of the grid that powers modern life was built over a century ago. Today, it faces pressures it was never designed to handle. The rise of the internet, digitalisation, and, more recently, the rapid expansion of clean energy and artificial intelligence have all placed new demands on electricity systems. Modernising the grid is therefore no longer optional - it is essential.
Historically, power networks were designed for an energy system dominated by fossil fuels such as coal, gas, and nuclear power. That world is changing rapidly. For the first time in history, renewable energy has become the world’s largest source of electricity generation, overtaking coal. Over the past decade, solar and onshore wind have emerged as the fastest-growing and most cost-effective sources of power.
Source: First Trust, Clean Edge presentation
This shift in energy production has fundamentally altered how electricity must be transmitted, distributed, and stored. Renewable generation is inherently variable, fluctuating with weather conditions and time of day. To manage this, electricity networks require smarter systems capable of balancing supply and demand dynamically. New transmission lines are needed to move renewable power from remote generation sites to population centres, while storage and conversion systems must be upgraded to support the increasing share of renewables in the energy mix. These are just a few of the examples that necessitate the grid’s modernisation.
Investment trends reflect this transition. Global spending on clean energy now exceeds investment in fossil fuels by more than two to one.
Source: First Trust, Clean Edge presentation
One fund we particularly like in this space is the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF. The ETF provides investors with targeted exposure to companies driving the digital transformation of global electricity networks. It tracks the Clean Edge Smart Grid Index, a unique benchmark that remains the only pure-play equity index focused specifically on grid modernisation.
The index is composed of 113 companies diversified across regions and sectors, grouped into four key segments: Grid Infrastructure, Energy Storage & Conversion, Electric Meters, Devices & Networks, and Enabling Software. To enhance liquidity and diversification, each constituent must meet strict eligibility criteria, including a minimum market capitalisation of $100 million, a minimum average daily trading volume of $500,000, and a free float of at least 20%. The index is rebalanced quarterly and reconstituted semi-annually to ensure it remains aligned with industry developments.
Importantly, 80% of the index is comprised of “pure play” companies - those deriving the majority of their revenues from smart grid activities, while the remaining 20% represents diversified companies contributing to the broader modernisation theme. Notably, 99% of the index constituents are profitable, reflecting the maturity and financial stability of the index.
We access the index through the First Trust ETF, which offers a liquid, diversified, and efficient means of investing in this long-term growth opportunity. Its performance characteristics differ meaningfully from our existing global equity positions, providing a specialist exposure that complements our broader portfolios.
Source: CAM
We favour this fund for its clear focus on sustainable infrastructure, its strong ESG alignment, and its exposure to a compelling structural investment theme. Its differentiated return profile and low correlation to conventional equity markets make it a valuable contributor to portfolio diversification and long-term capital growth. For these reasons, it remains a key holding within our thematic equity allocation.
This commentary was prepared by the CAM Research Team.