ALPS Electrification Infrastructure ETF

ELFY

Market cap $170M

Thematic investing has returned to the spotlight, but investors are moving beyond direct AI plays to focus on electrification infrastructure needed to power data centers and artificial intelligence (AI) growth. Key Takeaways: ELFI provides broad electrification exposure through utilities, uranium, copper, and two other sectors with equal weighting.

Artificial intelligence infrastructure investing requires looking beyond semiconductors to the physical systems powering the digital revolution, according to Paul Baiocchi, head of fund strategy at SS&C ALPS Advisors. In an interview at the Exchange conference in Las Vegas, Baiocchi outlined a mosaic approach using three funds to capture different layers of infrastructure growth.

The buildout of America's electrification infrastructure has hit a wall, and it's not a lack of demand. Lead times for critical equipment like transformers and high-voltage switchgear have stretched to more than 100 weeks, according to a recent McKinsey report.

Data center developers plan to reduce their reliance on utility grids by investing in onsite power for rapidly scaling facilities. The shift creates opportunities for electrification infrastructure providers as energy independence takes on new urgency.

Energy is among the smallest sectors in the S&P 500, representing only about 3.5% of the benchmark's sector allocations, and yet, it's energy that's capturing investor attention this year. A big part of the story centers on oil and natural gas, now in sharp focus due to an ongoing conflict in the Middle East.

Infrastructure lies at the intersection of investing and government spending. This includes electrification infrastructure.

ALPS Electrification Infrastructure ETF (ELFY) offers diversified exposure to electrification across utilities, industrials, and energy, but remains unproven after only 10 months. ELFY's equal-weighted, 100-stock structure provides discovery potential but limits concentrated upside; utilities currently dominate with 40% allocation. Valuation at 4.4x sales and 30x earnings is neither compelling nor cheap, with sub-5% ROI and mediocre sales growth for a growth-themed ETF.

During a recent interview, Paul Baiocchi, head of fund sales and strategy at SS&C ALPS Advisors, explained why thematic ETFs and active fixed income are experiencing renewed interest as investors look beyond the Magnificent Seven's dominance.

The ALPS Electrification Infrastructure ETF (ELFY) is drawing investor attention as U.S. electricity demand heads for its fastest growth in decades, driven by artificial intelligence data centers, manufacturing reshoring, and expanding electric vehicle infrastructure. The fund has pulled in $79.9 million over the past six months and $37.

The central question facing investors heading into 2026 is whether market performance will finally extend beyond the handful of megacap technology companies that have dominated returns for the past three years.