The industrials sector contains some of the great workhorses of the U.S. economy. Containing about 10% of components on the S&P 500, the corresponding exchange-traded fund (ETF), Industrial Select Sector SPDR ETF (XLI), invests in large-cap companies in the Industrial Select Sector Index. This index covers areas such as aerospace and defense, machinery, airlines, construction and engineering.
Unlike the consumer discretionary sector featured last week, industrials do not fluctuate much with the rise and fall of consumer sentiment; rather, they are more closely attuned to trends both domestically and abroad.
With a string of positive U.S. sessions in October and news of a strengthening global economy, XLI’s stock has risen more than 12% in a little over a month from its low in late September. The fund still is down about 3.5% year to date, but it could be in a good position if the global market continues to be solid. The dividend yield is a little over 2% and has increased in each quarter of 2015 so far. XLI also has more than $6.5 billion in assets managed, with an expense ratio of 0.15%.
Due to the sector’s diversity, XLI’s top holdings represent several different fields. Combined, the top 10 holdings account for nearly 50% of the fund’s assets. The biggest holding by far is General Electric (GE), with 11.38% of total assets, more than double the weighting of other top companies. 3M (MMM), the adhesives company, has 5.3% of assets, followed by aerospace giant Boeing (BA) with 5.13%. Honeywell International (HON) and United Technologies (UTX) each hold 4.4%.
If an industrial fund featuring these classic American companies seems appealing to you, you may want to take a look at Industrial Select Sector SPDR ETF (XLI). In my next ETF Talk column, I plan to write about another sector for your consideration.
If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.
In case you missed it, I encourage you to read my e-letter column from last week about a Consumer Discretionary fund that reflects the broader economy. I also invite you to comment in the space provided below.