The industrial sector is the sixth-largest sector weight in the S&P 500. The group and its related exchange traded funds (ETFs) have been solid though not spectacular performers this year. Within the broader industrial sector, transportation stocks have also been solid.
According to the U.S. Bureau of Transportation, the volume of freight transported by road, rail, air, barge and pipelines has been flattening or lower since the end of 2014, Reuters reports. Meanwhile, stubbornly low energy prices may help the transportation industry cut down on costs.
Headwinds remain for the industrial sector. The sell-off in the oil markets has weighed on capital spending from the energy sector as producers hold off on new projects, pressuring U.S. industrial companies and sector-related exchange traded funds.
Moreover, the industrial space is being weighed down by a slowing global outlook and a strengthening U.S. dollar.
Related: Lingering Issues For Industrial ETFs
The industrial space includes a large global exposure and the weakening overseas economies, notably in the emerging countries, are could weigh on demand. Furthermore, a strengthening U.S. dollar makes these exports more expensive to foreign buyers.
Still, the recent strength displayed by some of the following industrial ETFs could be a sign of more upside to come for the sector.
Traditional Industrial ETFs
Industrial Select Sector SPDR (XLI)
Vanguard Industrials ETF (VIS)
iShares U.S. Industrials ETF (IYJ)
Fidelity MSCI Industrials Index ETF (FIDU)
PowerShares S&P SmallCap Industrials Portfolio (PSCI)
iShares Transportation Average ETF (IYT)
U.S. Global Jets ETF (JETS)
SPDR S&P Transportation ETF (XTN)
Guggenheim Global Shipping ETF (SEA)
Aerospace and Defense ETFs
SPDR S&P Aerospace & Defense ETF (XAR)
PowerShares Aerospace & Defense Portfolio (PPA)
iShares U.S. Aerospace & Defense ETF (ITA)
First Trust ISE Water ETF (FIW)
PowerShares Water Resources Portfolio (PHO)
Guggenheim S&P Global Water Fund (CGW)
PowerShares Global Water Portfolio (PIO)
Smart Beta Industrial ETFs
First Trust Industrial/Producer Durable AlphaDEX (FXR)
PowerShares DWA Industrials Momentum Portfolio (PRN)
First Trust RBA American Industrial Renaissance ETF (AIRR)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.