ELFY ETF Targets U.S. Power-Grid Builders

The ALPS Electrification Infrastructure ETF, trading under the ticker ELFY, focuses on companies that build, maintain and move electricity across the U.S. rather than the large technology firms that consume power. U.S. electricity demand has climbed to roughly 5% a year after decades of growth below 1%.

Mark McLean, who created the index underlying ELFY and is managing director and head of power and energy at Ladenburg Thalmann, described drivers behind the rise in demand on a podcast. He flagged artificial intelligence data centers as a visible factor but said the trend also reflects industrial onshoring tied to federal tax credits, faster adoption of electric vehicles, bitcoin mining, commercial robotics and state policies shifting gas appliances to electric. In parts of Texas, Louisiana and Iowa, local demand growth is approaching 10%.

The index allocates about 40% to regulated utilities, reflecting capital programs to retire coal-fired plants and to add renewable generation and transmission lines. Remaining weights include operators of natural gas pipelines, copper miners, uranium producers and manufacturers of turbines and other grid equipment. McLean cited GE Vernova as an example of a company included in the index.

McLean compared the strategy to a “picks and shovels” approach to electrification. He said the index aims to capture returns from suppliers of capacity and network equipment rather than from end users that create spikes in consumption.

He drew a parallel with U.S. electricity trends in the mid-20th century, when demand exceeded GDP growth between 1953 and 1972 as returning service members, urban growth and the mass adoption of refrigeration and air conditioning made electricity a household staple.

The index administrator receives a fee for maintaining the benchmark for ELFY, and McLean’s firm participated in constructing the index. The ETF’s composition reflects an emphasis on regulated assets and industrial suppliers involved in expanding electricity capacity and transmission.