Four years after the Great Recession brought the economy to its knees, industrial America is experiencing a renaissance. Thanks to the housing recovery, the fracking boom, solid demand from emerging markets and low interest rates, the outlook for U.S. manufacturers is as promising as it has been in years. You would think you could play the trend by buying an exchange-traded fund that tracks the Dow Jones industrial average. But the venerable Dow contains a number of companies, such as American Express and Disney, that may manufacture a lot of profits but don't make anything tangible.
Enter the Industrial Select Sector SPDR Fund (symbol XLI). This ETF replicates a Standard & Poor’s index that contains 60 stocks in 12 subsectors, ranging from aerospace and defense to railroads and trucking. Most of the ETF’s holdings pay dividends, and its yield should be similar to that of Standard & Poor's 500-stock index, says David Mazza, an ETF manager at State Street Global Advisors, which runs the SPDR funds. The fund mostly holds mature companies, but analysts expect their earnings to grow in line with the broad market over the next few years.
No single stock can account for more than 25% of the index’s assets. The largest holding, General Electric, is about half that figure. Like the index, the ETF is rebalanced at the end of every quarter. Because the S&P 500's turnover is low, the ETF's holdings generally remain the same throughout the year.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Average Spending by Age for Those 55 and Up: Are You Thrifty?Everybody has their own number for how much they’ll spend in retirement. See if your's is in line with the averages.
-
IRS Paper Checks Deadline: What Happens After September 30?Tax Changes Avoid delays when IRS tax refunds and Social Security paper checks are cut off. Here’s what to know.
-
The 5 Best Actively Managed Fidelity Funds to Buy and Holdmutual funds Sometimes it's best to leave the driving to the pros – and these actively managed Fidelity funds do just that, at low costs to boot.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
-
How to Choose a Mutual Fundmutual funds Investors wanting to build a portfolio will have no shortage of mutual funds at their disposal. And that's one of the biggest problems in choosing just one or two.
