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Global Manufacturing in Growth Zone: ETFs to Watch
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The beginning of Q4 calls for an improving trend in manufacturing activity globally. Readings in several big economies’ manufacturing activities came in favorable in recent times giving cues of renewed strength in global superpowers. This area has long been an issue given global growth worries translating into softer demand. However, the weakness has slowly been dispersing. Let’s take a look at the data points. Most of the PMI readings came in higher than 50, which points to an expansion in activity.
Improving Trend in the US
ISM purchasing manufacturers’ index grew to 51.9 in October from 51.5 in September and was in line with economists’ forecast. As many as 10 out of 18 industries recorded growth in October in the U.S. Another data compiled by private data provider Markit showed that manufacturing PMI for October came in at 53.4 following 51.5 in September (read: ETFs to Watch on Industrial Sector Q3 Results).
Chinese Manufacturing at 2-Year High
Factory activity in China grew at its quickest clip in more than two years in October, aiding the world's second-largest economy. China’s official PMI came in at 51.2 for October, up from September's 50.4 and economists’ forecast of 50.3 (read: 3 China ETFs Set to Pop on Encouraging Data).
Euro Zone Activity at 30-Month High
The Euro zone’s manufacturing PMI also rose in October as the preliminary data. Markit indicated that the Euro zone’s manufacturing PMI was 53.3 in October, up from 52.6 in September as well as analysts’ expectation of 52.6. It is the highest reading since April 2014. New order growth and uptick in employment led to this improvement (read: How to Trade Strengthening Euro Zone Economy via ETFs).
UK Manufacturing PMI in Growth Zone; But Falling
On the downside, UK manufacturing PMI was 54.3 in October, down from 55.5 in September. The data also missed the expectation of 54.6 by a whisker. However, even after a disappointing figure, the reading was still in the growth zone.
Japan Manufacturing at 9-Month High
The Nikkei Japan Manufacturing PMI also increased to 51.4 in October from September's 50.4. The reading was the highest since January. Both new order and output growth picked up pace.
Though all is still not well across the globe, noticeable improvement in the famous four (barring the slowdown in UK) gives us reasons to look at the below-mentioned global industrial ETFs (see all industrials ETFs here).
The $177.1-million ETF is heavy on the U.S. which takes about 51.5% of the basket. Japan (19.9%), France (5.7%) and United Kingdom (4.9%) round out the next three spots. General Electric (7.36%), 3M Co. (2.83%) and Siemens AG (2.46%) are the top three stocks of the fund. The fund chares 47 bps in fees.
First Trust ISE Global Engineering and Construction Index Fund
The $14.3-million ETF is heavy on Japan (25.9%) followed by the U.S. (18.4%) and France (7.8%) and United Kingdom (6.5%). China Railway Group Ltd. (Class H) (2.90%), Bouygues S.A. (2.77%) and Vinci S.A. (2.74%) are the top three stocks of the fund. The 69-stock fund chares 70 bps in fees.
SPDR S&P International Industrial Sector ETF ()
The $17.8-million ETF is also heavy on Japan with about 34.3% weight. U.K., France and Germany take the next three spots with about 9.8%, 9.6% and 7.1% weight, respectively. Siemens AG (3.73%), Canadian National Railway Company (2.11%) and ABB Ltd. (2.00%) are the top three stocks of the fund.
China Industrials ETF
The Global X China Industrials ETF seeks to provide investment results of the Solactive China Industrials Total Return Index. The $3.8-million fund charges 65 bps in fees. This fund is heavy on building & construction (33.5%) and machinery & equipment (32%) industries. The fund has exposure to about 40 stocks.
A look at U.S. industrial ETFs like XLI also seems warranted. General Electric occupies the top spot with 10.2% allocation, while 3M, Honeywell and Boeing have a combined exposure of over 14% in the fund. XLI has garnered $7.45 billion in assets and trades in heavy volume of about 10 million shares per day. It has a low expense ratio of 0.14%. The fund has the highest exposure to aerospace & defense (22.4%), followed by industrial conglomerates (21.3%).
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Global Manufacturing in Growth Zone: ETFs to Watch
The beginning of Q4 calls for an improving trend in manufacturing activity globally. Readings in several big economies’ manufacturing activities came in favorable in recent times giving cues of renewed strength in global superpowers. This area has long been an issue given global growth worries translating into softer demand. However, the weakness has slowly been dispersing. Let’s take a look at the data points. Most of the PMI readings came in higher than 50, which points to an expansion in activity.
Improving Trend in the US
ISM purchasing manufacturers’ index grew to 51.9 in October from 51.5 in September and was in line with economists’ forecast. As many as 10 out of 18 industries recorded growth in October in the U.S. Another data compiled by private data provider Markit showed that manufacturing PMI for October came in at 53.4 following 51.5 in September (read: ETFs to Watch on Industrial Sector Q3 Results).
Chinese Manufacturing at 2-Year High
Factory activity in China grew at its quickest clip in more than two years in October, aiding the world's second-largest economy. China’s official PMI came in at 51.2 for October, up from September's 50.4 and economists’ forecast of 50.3 (read: 3 China ETFs Set to Pop on Encouraging Data).
Euro Zone Activity at 30-Month High
The Euro zone’s manufacturing PMI also rose in October as the preliminary data. Markit indicated that the Euro zone’s manufacturing PMI was 53.3 in October, up from 52.6 in September as well as analysts’ expectation of 52.6. It is the highest reading since April 2014. New order growth and uptick in employment led to this improvement (read: How to Trade Strengthening Euro Zone Economy via ETFs).
UK Manufacturing PMI in Growth Zone; But Falling
On the downside, UK manufacturing PMI was 54.3 in October, down from 55.5 in September. The data also missed the expectation of 54.6 by a whisker. However, even after a disappointing figure, the reading was still in the growth zone.
Japan Manufacturing at 9-Month High
The Nikkei Japan Manufacturing PMI also increased to 51.4 in October from September's 50.4. The reading was the highest since January. Both new order and output growth picked up pace.
Though all is still not well across the globe, noticeable improvement in the famous four (barring the slowdown in UK) gives us reasons to look at the below-mentioned global industrial ETFs (see all industrials ETFs here).
iShares Global Industrials ETF (EXI - Free Report)
The $177.1-million ETF is heavy on the U.S. which takes about 51.5% of the basket. Japan (19.9%), France (5.7%) and United Kingdom (4.9%) round out the next three spots. General Electric (7.36%), 3M Co. (2.83%) and Siemens AG (2.46%) are the top three stocks of the fund. The fund chares 47 bps in fees.
First Trust ISE Global Engineering and Construction Index Fund
The $14.3-million ETF is heavy on Japan (25.9%) followed by the U.S. (18.4%) and France (7.8%) and United Kingdom (6.5%). China Railway Group Ltd. (Class H) (2.90%), Bouygues S.A. (2.77%) and Vinci S.A. (2.74%) are the top three stocks of the fund. The 69-stock fund chares 70 bps in fees.
SPDR S&P International Industrial Sector ETF ()
The $17.8-million ETF is also heavy on Japan with about 34.3% weight. U.K., France and Germany take the next three spots with about 9.8%, 9.6% and 7.1% weight, respectively. Siemens AG (3.73%), Canadian National Railway Company (2.11%) and ABB Ltd. (2.00%) are the top three stocks of the fund.
China Industrials ETF
The Global X China Industrials ETF seeks to provide investment results of the Solactive China Industrials Total Return Index. The $3.8-million fund charges 65 bps in fees. This fund is heavy on building & construction (33.5%) and machinery & equipment (32%) industries. The fund has exposure to about 40 stocks.
Industrial Select Sector SPDR Fund (XLI - Free Report)
A look at U.S. industrial ETFs like XLI also seems warranted. General Electric occupies the top spot with 10.2% allocation, while 3M, Honeywell and Boeing have a combined exposure of over 14% in the fund. XLI has garnered $7.45 billion in assets and trades in heavy volume of about 10 million shares per day. It has a low expense ratio of 0.14%. The fund has the highest exposure to aerospace & defense (22.4%), followed by industrial conglomerates (21.3%).
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>