Digital Infrastructure ETF: SRVR's Growth Amidst Poor Fund Performance

SRVR: The Pacer Data & Infrastructure Real Estate ETF is focused on the growing trend of digital infrastructure, driven by the economy's increasing digitalization and the adoption of A.I. and Cloud technologies. The fund aims to capitalize on this trend by investing in companies that provide data infrastructure services.

The Pacer Data & Infrastructure Real Estate ETF (SRVR) is positioned at the forefront of the burgeoning digital infrastructure sector, capitalizing on the economy's increasing digitalization and the adoption of artificial intelligence (A.I.) and cloud technologies. The fund aims to invest in companies that provide essential data infrastructure services, a sector projected to witness substantial growth.

SRVR tracks the performance of the Solactive GPR Data & Infrastructure Real Estate Index and holds 24 companies, with a significant 75.16% concentration on the top 10, and the top 3 alone represent a concentration of 42%. The fund's sector breakdown includes real estate (59.90%), communication services (23.82%), and information technology (13.27%). Key holdings include Equinix (EQIX), American Tower (AMT), and Digital Realty (DLR), all of which are leaders in their respective fields.

The global market for data centers, currently worth $270 billion, is expected to reach $585 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 11.7%. This growth is driven by the increasing use of data linked with A.I. and cloud markets, which are expected to contribute to a 20% increase in data center earnings by 2025. SRVR's criterion of 85% of revenues coming from data/infrastructure activities ensures that all holdings are aligned with this trend.

However, SRVR faces several challenges. Its expense ratio of 0.55% is above that of peers like the iShares U.S. Digital Infrastructure and Real Estate ETF (IDGT) at 0.39% and the Global X Data Center & Digital Infrastructure ETF (DTCR) at 0.50%. Additionally, SRVR's P/E ratio of 43.83 is significantly higher than that of DTCR at 23.99, which could indicate overvaluation. SRVR's performance has consistently underperformed peers over the past three years, with the fund losing an additional 1% in July 2025.

SRVR's high concentration on top holdings, such as Equinix and American Tower, exposes the fund to significant company-specific risks, including regulatory scrutiny and power shortages. The macroeconomic environment also poses risks, with high P/E ratios making the fund sensitive to interest rate changes and borrowing costs.

In conclusion, while the digital infrastructure sector is supported by strong tailwinds, SRVR may not be the most compelling option for investors. Its high expense ratio, overvaluation, and underperformance relative to peers suggest that there may be better investment opportunities available.

References:
[1] https://seekingalpha.com/article/4814012-srvr-strong-data-infrastructure-trends-but-poor-fund
[2] https://www.marketbeat.com/instant-alerts/filing-vanguard-group-inc-raises-stock-position-in-alexandria-real-estate-equities-inc-nyseare-2025-08-09/