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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.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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 1, placing it in top 6%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $14.16 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 1.61%.
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, Raytheon Technologies Corporation (RTX - Free Report) accounts for about 5.14% of total assets, followed by Honeywell International Inc. (HON - Free Report) and Union Pacific Corporation (UNP - Free Report) .
The top 10 holdings account for about 38.74% of total assets under management.
Performance and Risk
The ETF has added about 1.29% so far this year and is up roughly 2.86% in the last one year (as of 03/15/2023). In that past 52-week period, it has traded between $82.84 and $104.71.
The ETF has a beta of 1.11 and standard deviation of 25.09% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XLI is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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 $1.63 billion in assets, Vanguard Industrials ETF has $3.77 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.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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 1, placing it in top 6%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $14.16 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 1.61%.
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, Raytheon Technologies Corporation (RTX - Free Report) accounts for about 5.14% of total assets, followed by Honeywell International Inc. (HON - Free Report) and Union Pacific Corporation (UNP - Free Report) .
The top 10 holdings account for about 38.74% of total assets under management.
Performance and Risk
The ETF has added about 1.29% so far this year and is up roughly 2.86% in the last one year (as of 03/15/2023). In that past 52-week period, it has traded between $82.84 and $104.71.
The ETF has a beta of 1.11 and standard deviation of 25.09% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XLI is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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 $1.63 billion in assets, Vanguard Industrials ETF has $3.77 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.