MW This stock-market strategy lets you play the energy boom while cutting your risk

By Philip van Doorn

Brock Campbell, the head of research at BNY Investments Newton, holds midstream energy companies with pipelines in place to serve new markets

The Sabal Trail Transmission pipeline is operated by Enbridge, whose stock is the second largest holding of the BNY Mellon Global Infrastructure Income ETF.

A broad investment strategy encompassing infrastructure across developed markets can offer U.S. investors a way to ride along with economic trends at a discount to the price/earnings valuation of the S&P 500.

The BNY Mellon Global Infrastructure Income ETF BKGI was established in November 2022. This exchange-traded fund is actively managed by Brock Campbell, the head of research at BNY Investments Newton. The fund has grown to hold $640 million in assets under management and has a five-star rating (the highest) within Morningstar's U.S. Fund Infrastructure fund category.

The fund holds a concentrated portfolio of 28 stocks of dividend-paying companies, including electric utilities, energy producers and pipeline operators, real-estate investment trusts, construction and engineering companies and telecommunications providers. The portfolio is about 42.5% concentrated in U.S. stocks, with the rest spread mainly across other developed countries.

Campbell, who is based in Boston, told MarketWatch during an interview that investors should consider BKGI to be a value portfolio because "it will consistently be cheaper than broader markets."

"We think value over a full cycle is advantageous over broad markets," he said.

This value fund's objective is long-term growth as well as income. BKGI quotes a 30-day yield of 3.90% and aims for a portfolio yield as high as 6%. Over the past three years, it has been a competitive growth investment, as you can see below.

'We want inexpensive companies where we have a different view of intrinsic value than the market, with a catalyst.'Brock Campbell, head of research at BNY Investments Newton and portfolio manager for the BNY Mellon Global Infrastructure Income ETF

One way to compare stock or portfolio valuations is to look at forward price/earnings ratios. For an individual stock, this would be the share price divided by the consensus earnings-per-share estimate among analysts for the next 12 months. For a stock index, a forward P/E can be calculated, weighted the same way as the index - by the companies' market capitalizations for the S&P 500 SPX, for example. For a fund, a forward P/E can be calculated with the same weighting as the portfolio.

According to LSEG, the BNY Mellon Global Infrastructure Income ETF's forward P/E is 16.27 and the forward P/E for the S&P 500 is 21.67.

The BNY Mellon Global Infrastructure Income ETF's performance benchmark is the S&P Global Infrastructure Index XX:STRGLIFX. That index is tracked by the State Street SPDR S&P Global Infrastructure ETF GII, which reports a forward P/E of 20.45.

This is how the BNY Mellon Global Infrastructure Income ETF, the S&P 500 and the State Street SPDR S&P Global Infrastructure ETF have performed over the past three years through Wednesday. All investment returns in this article include reinvested dividends and are net of expenses.

For the three years through Feb. 11, 2026, the BNY Mellon Global Infrastructure Income ETF outperformed the S&P 500.

The BNY Mellon Global Infrastructure Income ETF's three-year return through Wednesday was only slightly ahead of the S&P 500's return. But the fund has provided a smoother ride for investors, as you can see by the movement last year, when the S&P 500 fell hard from a peak in mid-February through a low on April 8, after President Donald Trump's initial wave of tariff announcements.

So the strategy has worked out well so far, with a discounted valuation to the S&P 500, as well as diversification away from that large-cap U.S. benchmark.

Two infrastructure themes

"Infrastructure is naturally less sensitive to the economy than other companies," Campbell said. "You will require heat and water and electricity, and you will require data for your home."

When asked in general what he was looking for when selecting companies for the BKGI portfolio, he said: "We want inexpensive companies where we have a different view of intrinsic value than the market, with a catalyst."

Most investors are aware of the growing demand for electricity to power data centers supporting the development of generative artificial intelligence technology. There has been plenty of speculation about new sources of nuclear power; however, it can take many years for a nuclear facility to come online.

Natural gas is a plentiful resource in the U.S., with exports of liquid natural gas continuing to increase. Within the U.S., however, there is a shortage of gas pipelines. So Campbell is focusing on companies with existing gas pipelines.

"We want to hold companies that are near these three things: AI data centers, proposed new natural-gas [power plants] and coal-fired power plants," he said. Coal plants are likely to be replaced by natural-gas plants, provided that a ready supply of gas can be piped in.

"It is so difficult to build large pipelines that if you are close to these three things, there is an opportunity to serve growing areas of the market," Campbell said.

Another theme he cited during the interview was healthcare properties.

"When you look at the baby boomer demographic, it is about to enter the 80s. When you are 80 and above, your propensity to require these services goes up dramatically," he said. So this theme encompasses medical facilities as well as senior housing projects that offer multiple levels of services to residents.

Top 10 holdings

The BNY Mellon Global Infrastructure Income ETF discloses its entire portfolio daily. Here are its top 10 holdings as of Wednesday:

   Company                                  % of BKGI portfolio  Forward P/E  Dividend yieldCountry  Industry 
   Enel S.p.A.                                             8.0%         13.6           4.97%Italy    Electric Utilities 
   Enbridge Inc.                                           7.3%         22.7           5.55%Canada   Oil & Gas Transportation Services 
   Hess Midstream LP                                       6.7%         12.6           8.15%U.S.     Oil & Gas Transportation Services 
   Healthpeak Properties Inc.                              6.1%        100.8           7.19%U.S.     Specialized REITs 
   Engie S.A.                                              5.9%         13.9           5.55%France   Multiline Utilities 
   Dominion Energy Inc.                                    5.4%         17.7           4.13%U.S.     Electric Utilities 
   Orange S.A.                                             5.1%         14.8           4.37%France   Integrated Telecommunications Services 
   Bouygues S.A.                                           5.1%         14.3           4.02%France   Construction & Engineering 
   Omega Healthcare Investors Inc.                         4.3%         23.5           5.73%U.S.     Specialized REITs 
   Italgas S.p.A.                                          3.8%         13.9           3.53%Italy    Natural Gas Utilities 
                                                                                                        Sources: BNY Mellon Securities, LSEG 

You might need to scroll the table or flip your screen to landscape to see all of the data.

The table includes forward P/E ratios, dividend yields and industry groups. The forward P/E for Healthpeak Properties (DOC) is a high 100.8. However, the stock trades for 9.6 times the consensus funds-from-operations estimate for the next 12 months among analysts polled by LSEG. FFO adds depreciation and amortization back to earnings. This non-GAAP measure is commonly used to estimate how much cash is available to a real-estate investment trust to pay dividends.

For Omega Healthcare Investors (OHI), the other REIT on the list, the forward price/FFO ratio is 14.2.

Competing ETFs

The BNY Mellon Global Infrastructure Income ETF's full expense ratio is 0.65%, which would make for annual expenses of $65 on a $10,000 investment. The fund's expense ratio is being limited to 0.55% at least until the end of this month.

This table lists five more ETFs. These are drawn from LSEG's list of peer funds, but limited to those that have performed best over the past three years, among the ones broadly invested in infrastructure companies:

   Exchange-traded fund                                   1-year return  3-year avg. return  5-year avg. return  Launch date  Net expense ratio 
   BNY Mellon Global Infrastructure Income ETF                    37.9%               18.7%                 N/A    11/2/2022              0.55% 
   State Street SPDR S&P Global Infrastructure ETF                25.1%               13.9%               11.8%    1/25/2007              0.40% 
   iShares Global Infrastructure ETF                              25.2%               13.8%               11.8%   12/10/2007              0.39% 
   iShares Emerging Markets Infrastructure ETF                    42.0%               13.0%                8.0%    6/16/2009              0.60% 
   ProShares DJ Brookfield Global Infrastructure ETF              19.4%               10.5%               10.6%    3/25/2014              0.46% 
   FlexShares STOXX Global Broad Infrastructure Index             18.8%                9.9%                6.9%    10/8/2013              0.47% 
                                                                                                                                   Source: LSEG 

The Bank of New York Global Infrastructure ETF had the highest average three-year return through January. For one year through January, the iShares Emerging Markets Infrastructure ETF EMIF took the top spot.

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-Philip van Doorn

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