When targeting a certain industry, sector ETFs are a great way to gain instant exposure without having to corner the market in related stocks or battle the price of an index basket. So, if you are looking to target the industrials sector in your investing strategy, an industrial ETF may be a great fit for your portfolio.
The industrials sector usually includes companies involved in such industries like (but not limited to) engineering, heavy machines, parts manufacturing, construction, electrical equipment, aerospace and defense, and general manufacturing. The companies can even be involved with cross sectors such as technology, utilities and even consumer discretionary.
So if you feel this is an opportunity for your investment strategy, not only will you have specific access to the sector with industrial funds, but you’ll also get the benefit of the many advantages that come with ETF investing—tax advantages, cost advantages, and other advantages.
And more good news, there is a decent amount of industrials ETFs to select including foreign, leveraged and inverse funds. At the moment, there are several industrials ETFs and as more become available, I will update this list. Also, if any are delisted, I will remove them from the list as well. So check back often. In the meantime, here is your current list of industrial ETFs.
CHII – Global X MSCI China Industrials ETF
This China ETF correlates with the Solactive China Industrials Index and some of its holdings include Citic Ltd., Weichan Power Co. Ltd., and Conch Venture. Global X MSCI China Industrials ETF (CHII) has been trading since November of 2009 and targets companies that are located in China or conduct the majority of their business in the country.
IYJ – iShares US Industrial ETF
This ETF correlates with the Dow Jones U.S. Industrials Index and holds industry-related companies like General Electric, PayPal, and 3M. There are 191 stocks in the fund as of May 2021 and it was launched way back in June of 2000. As for the sector breakdown, the iShares U.S. Industrials ETF (IYJ) pretty diverse covering general industrials, industrial engineering, aerospace, support services, transportation, and electrical equipment.
PRN – Invesco DWA Industrials Momentum ETF
This industrials fund tracks the Dorsey Wright Industrials Technical Leaders Index and holds companies such as AMETEK, Old Dominion Freight Line, and Trane Technologies. Obviously, industrials are the major sector in the Invesco DWA Industrials Momentum ETF (PRN), but it does cross over a bit into the utility sector as well.
PSCI – Invesco S&P SmallCap Industrials ETF
This small-cap ETF follows the S&P SmallCap 600 Capped Industrials Index and focuses on US companies such as Saia, UFP Industries, Watts Water Technologies, and Allegiant Travel. Other than industrials being the major sector represented, the Invesco S&P SmallCap Industrials ETF (PSCI) does spill over slightly into the Financials and Consumer Discretionary sector.
RGI – Invesco S&P 500 Equal Weight Industrials ETF
This fund tracks the S&P 500 Equal Weight Industrials Index and has companies such as United Parcel Service, Northup Grumman, and Equifax in its holdings. The largest sector represented in the Invesco S&P 500 Equal Weight Industrials ETF (RGI) is machinery, but other sectors such as aerospace and defense, commercial services and supplies, and electrical equipment are represented as well.
SIJ – ProShares UltraShort Industrials ETF
This is a leveraged and short ETF that inversely targets twice the daily return of the Dow Jones US Industrials Index. The ProShares UltraShort Industrials ETF (SIJ) uses derivatives such as swaps as well as some other assets like cash to achieve its investing goals.
UXI – ProShares Ultra Industrials ETF
Like SIJ above, this fund also seeks twice the daily return of the Dow Jones US Industrials Index, however, unlike SIJ, it is not an inverse fund. Some of the holdings in the ProShares Ultra Industrials ETF (UXI} include PayPal, Union Pacific Corp, Square, and Honeywell International.
New Industrial ETFs
- ARKQ - ARK Autonomous Technology & Robotics ETF
- EVX - VanEck Vectors Environmental Services ETF
- FIDU - Fidelity MSCI Industrials Index ETF
- FXR - First Trust Industrials/Producer Durables AlphaDEX ETF
- JHMI - John Hancock Multifactor Industrials ETF
- VIS - Vanguard Industrials ETF
- XLI - SPDR Industrial Select Sector ETF
It’s important to understand that no investment is without risk and that includes the above exchange-traded funds. So make sure you research each ETF individually and thoroughly. Understand how they work, what is in each fund, and how they may react to different market conditions. If you have any questions, be sure to consult your broker or a trusted financial professional. However, once you’ve conducted your due diligence and made the proper selections for your portfolio, I wish you nothing but good luck and industrial ETF profits.