The best industrial ETFs provide investors with varying degrees of exposure to different sectors of the industrial sector.
The industrial sector is essential to international trade.
Commercial and professional services, transportation, and the production and distribution of construction equipment are all provided by companies in this sector.
Many businesses, especially industrial ones, count on expansion to keep up with the world economy. Industrial stocks may suffer as a result of a slowing economy.
But that’s not true of all stocks in the industrial sector.
Companies in the sector include those in the defense and aerospace industries as well as those involved in waste management, all of which are very resilient to economic downturns.
Therefore, investors shouldn’t immediately write off all industrial companies whenever recession fears surface.
We have witnessed the industry’s response to 2022’s economic and political climate.
However, the Federal Reserve has begun raising interest rates in response to rising inflation, which may have an impact on economically sensitive industrial firms.
However, increasing defense spending should be good for defense stocks in light of Russia’s invasion of Ukraine.
Investors may find it challenging to select stocks that will prosper in response to the many variables at work in the industrial sector.
ETFs that specialize in the industrial industry are one possible answer.
Some of the best ETFs in the industrial sector are highlighted here.
Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN)
The Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN) tracks the performance of the S&P 500® Equal Weight Industrials Index, which gives the same weight to each stock in the Industrials subsector of the S&P 500 Index.
On November 1, 2006, this ETF entered circulation. On 8/11/2023, the cost ratio for investing in the 77 stocks in the Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN) was 0.40%. This sector ETF is a top pick among similar offerings.
Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN) has the largest position in Old Dominion Freight Line, Inc. (NASDAQ:ODFL).
They are one of the largest and most well-known LTL (less-than-truckload) motor carriers in the Americas.
The organization is well-known for its prompt and reliable LTL shipping throughout the country. Quarterly dividends of $0.40 per share were issued by Old Dominion Freight Line, Inc. (NASDAQ:ODFL) on July 20.
Dividends are due to shareholders of record on September 6 and will be paid on September 29.
First-quarter data shows that 37 hedge funds were long NASDAQ:ODFL (Old Dominion Freight Line, Inc.), up from 34 firms in the fourth quarter.
Citadel Investment Group, headed by Ken Griffin, holds the majority position in the business with 292,753 shares valued at almost $100 million.
If you want to invest as an expat or high-net-worth individual, you can email me (advice@adamfayed.com) or use these contact options.
Fidelity MSCI Industrials Index ETF (NYSE:FIDU)
The Fidelity MSCI Industrials Index ETF (NYSE:FIDU) tracks the investment results of MSCI industrials indexes in the United States. Its debut occurred on October 21, 2013, thanks to Fidelity.
Currently, the cost ratio of Fidelity MSCI Industrials Index ETF (NYSE:FIDU) is 0.08%, and the total assets under management by the fund’s holder of assets are $800.13 million.
The fund’s total stock holdings are 392. If you’re looking for a good industrial ETF, consider Fidelity MSCI Industrials Index ETF (NYSE:FIDU).
Fidelity MSCI Industrials Index ETF (NYSE:FIDU) holds a big position in Union Pacific Corporation (NYSE:UNP). Railroad company Union Pacific Corporation (NYSE:UNP) is publically traded on the New York Stock Exchange.
All sorts of agricultural and horticultural goods, as well as coal, renewable energy sources, petroleum, chemicals, polymers, wood products, metals, and ores, can be sent here.
Quarterly dividends for Union Pacific Corporation (NYSE:UNP) shares were issued at $1.30 on July 26. If you were a shareholder as of August 31st, you will get the dividend on September 29th.
The number of optimistic hedge funds on Union Pacific Corporation (NYSE:UNP) rose to 85 in the first quarter from 83 in the fourth quarter. Soroban Capital Partners, led by Eric W. Mandelblatt, owns 8.26 million shares in the corporation, making it the largest shareholder.
Invesco DWA Industrials Momentum ETF (NASDAQ:PRN)
The NASDAQ symbol “PRN,” which represents the Invesco DWA Industrials Momentum ETF, tracks the value of the Dorsey Wright® Industrials Technical Leaders Index.
The inception date of this ETF was October 12, 2006. The net expense ratio for The Invesco DWA Industrials Momentum ETF as of August 11, 2023 was 0.60%. The portfolio now consists of 45 different equities.
Invesco DWA Industrials Momentum ETF (NASDAQ:PRN) has a sizable position in Builders FirstSource, Inc. (NYSE:BLDR). Manufacturer and distributor of construction products and services, Builders FirstSource, Inc. (NYSE:BLDR), operates throughout the United States.
Non-GAAP EPS came in at $3.89 for the second quarter for Builders FirstSource, Inc. (NYSE:BLDR), while revenue came in at $4.53 billion, both of which were $290 million and $1.30 more than Wall Street had predicted.
Builders FirstSource, Inc. (NYSE:BLDR) was held by 51 hedge funds during the first quarter, down from 52 at the end of the previous quarter.
With 1.5 million shares worth $137.4 million, Ben Jacobs’s Anomaly Capital Management is the company’s largest shareholder.
First Trust Industrials/Producer Durables AlphaDEX Fund (NYSE:FXR)
The primary objective of the First Trust Industrials/Producer Durables AlphaDEX Fund (NYSE:FXR) is to provide investment outcomes that correspond to the price and yield movements of the StrataQuant® Industrials Index.
In December 2022, the First Trust Industrials/Producer Durables AlphaDEX Fund (NYSE:FXR) will have an expense ratio of 0.61%.
The fund was launched on May 8, 2007. On August 11, 2023, the ETF had 132 equities in its portfolio, which were valued at a total of $1.75 billion.
North American transportation and logistics firm Saia, Inc. (NASDAQ:SAIA) is the largest holding in First Trust Industrials/Producer Durables AlphaDEX Fund (NYSE:FXR).
Quarterly GAAP EPS for Saia, Inc. (NASDAQ:SAIA) came in at $3.42 on July 28th, above market expectations by $0.14. The $694.62M in revenue was $9.87M lower than expected by financial analysts.
The NASDAQ:SAIA stock held by 20 different hedge funds was worth $218 million at the end of the first quarter.
The largest shareholder is Palestra Capital Management, which has 238,903 shares of the company’s stock, which are now valued at $65 million.
Invesco Dynamic Building & Construction ETF (NYSE:PKB)
Following the performance of the Dynamic Building & Construction Intellidex Index is the goal of the Invesco Dynamic Building & Construction ETF (NYSE:PKB).
The 30 constituent stocks make up the U.S. Building & Construction Index. The Invesco Dynamic Building & Construction ETF (NYSE:PKB) was launched on October 26, 2005, and as of August 11, 2023, it has a portfolio of 31 equities with an expense ratio of 0.57%.
For your portfolio, it should be considered a top industrial ETF.
The largest holding in Invesco Dynamic Building & Construction ETF (NYSE:PKB) is PulteGroup, Inc. (NYSE:PHM).
In the United States, it focuses mostly on the homebuilding market. Single-family detached houses, townhomes, condominiums, and duplexes are only some of the housing options offered by the corporation.
In its earnings report for the second quarter released on July 25, PulteGroup, Inc. (NYSE:PHM) beat Wall Street expectations by $0.71 per share and $170 million in sales.
36 hedge funds were long PulteGroup, Inc. (NYSE:PHM) at the end of the first quarter, up from 30 funds at the end of the previous quarter.
With 5.7 million shares worth over $335 million, Harris Associates is the company’s biggest shareholder.
Invesco Aerospace & Defense ETF (NYSE:PPA)
The SPADE Defense Index serves as a primary reference point for the Invesco Aerospace & Defense ETF (NYSE:PPA).
The index follows US-based firms that work in the aerospace, defense, and homeland security industries.
The NYSE ticker symbol for Invesco Aerospace & Defense ETF (PPA) dates back to October 26, 2005.
As of Tuesday, August 11, 2023, the ETF’s cost ratio is 0.58%, and its portfolio consists of 55 equities. The Invesco Aerospace & Defense ETF (NYSE:PPA) ranks among the top industrial ETFs.
Invesco Aerospace & Defense ETF (NYSEE:PPA) has Boeing Company (NYSET:BA) as its largest investment.
Commercial and military aircraft, satellites, missile defense systems, spaceflight for humans, and launch mechanisms are all part of the company’s global scope of operations.
The Boeing Company (NYSE:BA) beat Q2 non-GAAP EPS forecasts of -$0.82 and revenue estimates of $19.75 billion, released on July 26.
These results were better by $0.07 and $1.16 billion, respectively than what was expected by Wall Street.
While 53 hedge funds were optimistic on The Boeing Company (NYSE:BA) a quarter ago, just 52 hedge funds were bullish on the stock in the first quarter.
With a $368.7 million holding, Two Sigma Advisors, led by John Overdeck and David Siegel, is a major shareholder.
Invesco Water Resources ETF (NASDAQ:PHO)
The Invesco Water Resources ETF (NASDAQ:PHO) is designed to mirror the price and yield movements of the NASDAQ OMX US Water Index.
To track the development of publicly traded American companies engaged in water reuse and purification for domestic, commercial, and industrial applications.
With a portfolio of 39 stocks as of August 11 and an expense ratio of 0.59%, Invesco Water Resources ETF (NASDAQ:PHO) has been around since June 12, 2005. This ETF is a top pick among similar ones in the industrial sector.
The Invesco Water Resources ETF (NASDAQ:PHO) holds shares in Ecolab Inc. (NYSE:ECL) more than any other company.
Ecolab Inc. (NYSE:ECL) is a global provider of hygiene, water management, and infection prevention systems and services.
Global Industrial, Global Healthcare & Life Sciences, and Global Institutional & Specialty are the three divisions the business operates under.
Keeping with tradition, Ecolab Inc. (NYSE:ECL) on August 3 announced a quarterly dividend of $0.53 per share. Payout will occur on October 16 to shareholders of record on September 19.
A total of 53 hedge funds were long NYSE:ECL at the end of the first quarter, up from 47 at the end of the previous quarter.
The largest stake in the corporation was owned by the Bill & Melinda Gates Foundation Trust, which consisted of 5.2 million shares valued at $863.7 million.
Final Thoughts
There are various methods available to investors for utilizing ETFs as a means of investing in the industrial sector.
Individuals have the option to possess an investment vehicle that provides comprehensive exposure to the entirety of the industry or one that adopts a more targeted strategy.
Industrial ETFs possess the potential to assume a significant role within an investor’s portfolio, considering the available alternatives.
As an illustration, during the initial phases of an economic recovery, individuals may choose to allocate their investments towards a diversified industrial ETF or a specialized ETF centred around airlines or transportation firms, with the aim of capitalizing on the ensuing recuperation.
In addition, individuals have the option to adopt a defensive investment strategy by allocating their funds towards an ETF that specifically targets defense equities, which have historically demonstrated a degree of resilience during economic downturns.
Investors may also contemplate the inclusion of a water-focused ETF in their investment strategy, with the intention of capitalizing on the hypothesis that the worth of assets associated with water will experience growth in the forthcoming period.
Industrial ETFs hold significant relevance in the investment landscape due to their diverse range of functions, hence necessitating investors’ comprehension of their utility.
Investors seeking expert guidance on diversifying their portfolios can explore private banking services, where they can access a range of investment funds, including the best industrial ETFs, best telecom ETFs, best energy ETFs, and best tech ETFs to achieve their financial goals.
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Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
