Designed to provide broad exposure to the Industrials - Broad segment of the equity market, the Industrial Select Sector SPDR ETF (XLI) is a passively managed exchange traded fund launched on 12/16/1998.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $22.18 billion, making it the largest ETF attempting to match the performance of the Industrials - Broad segment of the equity market. XLI seeks to match the performance of the Industrial Select Sector Index before fees and expenses.
The Industrial Select Sector Index includes companies from the following industries: industrial conglomerates; aerospace & defense; machinery; air freight & logistics; road & rail; commercial services & supplies; electrical equipment; construction & engineering; building products; airlines; and trading companies & distributors.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.29%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 100% of the portfolio.
Looking at individual holdings, General Electric (GE) accounts for about 4.53% of total assets, followed by Caterpillar Inc (CAT) and Rtx Corp (RTX).
The top 10 holdings account for about 34.86% of total assets under management.
Performance and Risk
The ETF has added roughly 26.47% and it's up approximately 33.14% so far this year and in the past one year (as of 12/03/2024), respectively. XLI has traded between $108.04 and $143.99 during this last 52-week period.
The ETF has a beta of 1.07 and standard deviation of 17.04% for the trailing three-year period, making it a medium risk choice in the space. With about 81 holdings, it effectively diversifies company-specific risk.
Alternatives
Industrial Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLI is a great option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust RBA American Industrial Renaissance ETF (AIRR) tracks Richard Bernstein Advisors American Industrial Renaissance Index and the Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index. First Trust RBA American Industrial Renaissance ETF has $2.86 billion in assets, Vanguard Industrials ETF has $6 billion. AIRR has an expense ratio of 0.70% and VIS charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
GE Aerospace (GE) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
Vanguard Industrials ETF (VIS): ETF Research Reports
First Trust RBA American Industrial Renaissance ETF (AIRR): ETF Research Reports
RTX Corporation (RTX) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
