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Should You Invest in the Industrial Select Sector SPDR ETF (XLI)?
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Designed to provide broad exposure to the Industrials - Broad segment of the equity market, the Industrial Select Sector SPDR ETF (XLI - Free Report) is a passively managed exchange traded fund launched on 12/16/1998.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $14.44 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.43%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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, Union Pacific Corporation (UNP - Free Report) accounts for about 5.57% of total assets, followed by United Parcel Service Inc. Class B (UPS - Free Report) and Raytheon Technologies Corporation (RTX - Free Report) .
The top 10 holdings account for about 38.20% of total assets under management.
Performance and Risk
So far this year, XLI has lost about -9.01%, and is down about -5.95% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $95.14 and $107.12.
The ETF has a beta of 1.16 and standard deviation of 26.25% for the trailing three-year period, making it a medium risk choice in the space. With about 75 holdings, it effectively diversifies company-specific risk.
Alternatives
Industrial Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (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 IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) tracks StrataQuant Industrials Index and the Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index. First Trust IndustrialsProducer Durables AlphaDEX ETF has $1.63 billion in assets, Vanguard Industrials ETF has $4.38 billion. FXR has an expense ratio of 0.61% 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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Should You Invest in the Industrial Select Sector SPDR ETF (XLI)?
Designed to provide broad exposure to the Industrials - Broad segment of the equity market, the Industrial Select Sector SPDR ETF (XLI - Free Report) is a passively managed exchange traded fund launched on 12/16/1998.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $14.44 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.43%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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, Union Pacific Corporation (UNP - Free Report) accounts for about 5.57% of total assets, followed by United Parcel Service Inc. Class B (UPS - Free Report) and Raytheon Technologies Corporation (RTX - Free Report) .
The top 10 holdings account for about 38.20% of total assets under management.
Performance and Risk
So far this year, XLI has lost about -9.01%, and is down about -5.95% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $95.14 and $107.12.
The ETF has a beta of 1.16 and standard deviation of 26.25% for the trailing three-year period, making it a medium risk choice in the space. With about 75 holdings, it effectively diversifies company-specific risk.
Alternatives
Industrial Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (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 IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) tracks StrataQuant Industrials Index and the Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index. First Trust IndustrialsProducer Durables AlphaDEX ETF has $1.63 billion in assets, Vanguard Industrials ETF has $4.38 billion. FXR has an expense ratio of 0.61% 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.