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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 5, placing it in top 31%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $15.72 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 1.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 98.90% of the portfolio.
Looking at individual holdings, Raytheon Technologies Corporation (RTX - Free Report) accounts for about 5.02% of total assets, followed by United Parcel Service Inc. Class B (UPS - Free Report) and Honeywell International Inc. (HON - Free Report) .
The top 10 holdings account for about 37.27% of total assets under management.
Performance and Risk
The ETF has added roughly 12.46% and was up about 28.98% so far this year and in the past one year (as of 07/19/2023), respectively. XLI has traded between $82.84 and $109.63 during this last 52-week period.
The ETF has a beta of 1.12 and standard deviation of 18.66% for the trailing three-year period, making it a medium risk choice in the space. With about 76 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 an excellent 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 Industrials/Producer 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 Industrials/Producer Durables AlphaDEX ETF has $1.74 billion in assets, Vanguard Industrials ETF has $4.26 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 5, placing it in top 31%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $15.72 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 1.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 98.90% of the portfolio.
Looking at individual holdings, Raytheon Technologies Corporation (RTX - Free Report) accounts for about 5.02% of total assets, followed by United Parcel Service Inc. Class B (UPS - Free Report) and Honeywell International Inc. (HON - Free Report) .
The top 10 holdings account for about 37.27% of total assets under management.
Performance and Risk
The ETF has added roughly 12.46% and was up about 28.98% so far this year and in the past one year (as of 07/19/2023), respectively. XLI has traded between $82.84 and $109.63 during this last 52-week period.
The ETF has a beta of 1.12 and standard deviation of 18.66% for the trailing three-year period, making it a medium risk choice in the space. With about 76 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 an excellent 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 Industrials/Producer 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 Industrials/Producer Durables AlphaDEX ETF has $1.74 billion in assets, Vanguard Industrials ETF has $4.26 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.