Investors looking to capitalize on the potential rebound of U.S. manufacturing should consider exchange-traded funds (ETFs) that provide exposure across various sectors. This strategy allows investors to capture the theme of a growing manufacturing sector, which has gained attention due to increasing trade tensions and government initiatives to strengthen domestic production.
One of the top ETF picks in this space, according to Bank of America’s ETF strategist Jared Woodard, is the First Trust RBA American Industrial Renaissance ETF (AIRR). This fund, established in 2014, holds approximately $1.4 billion in assets and has outperformed the S & P 500 index over the last decade. With top holdings including Mueller Industries and Granite Construction, AIRR provides exposure to a diverse range of industries without any single stock dominating more than 4% of the fund.
What sets AIRR apart from other ETFs is its focus on small and mid-cap companies, offering investors a unique opportunity to capitalize on growth potential in these segments. Despite having a higher expense ratio compared to its peers, AIRR boasts the best risk-adjusted returns over a 5-year period, making it an attractive option for investors seeking exposure to the industrial sector.
For investors looking for a more concentrated exposure to industrial and materials stocks, the Global X US Infrastructure ETF (PAVE) presents an alternative option. This fund, launched in 2017, focuses on companies involved in construction, engineering, raw materials, and industrial transportation. With top holdings such as Trane Technologies and United Rentals, PAVE offers a diversified portfolio with no single stock exceeding 4% of the fund’s allocation.
While PAVE may have a shorter track record compared to AIRR, it has demonstrated robust performance with an average annualized return of over 20% in the past five years. With nearly $8 billion in assets under management, PAVE provides investors with exposure to a broader range of industrial and materials companies. Additionally, PAVE boasts a lower management fee of 0.47%, making it an attractive option for cost-conscious investors.
ETFs offer investors a convenient way to gain exposure to the growing U.S. manufacturing sector. With funds like AIRR and PAVE, investors have the opportunity to capitalize on the resurgence of domestic production and infrastructure development. By carefully evaluating their investment goals and risk tolerance, investors can make informed decisions on which ETF aligns best with their financial objectives.