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Should You Invest in the iShares U.S. Industrials ETF (IYJ)?

·4 min read

The iShares U.S. Industrials ETF (IYJ) was launched on 06/12/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Industrials - Broad segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.25 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. IYJ seeks to match the performance of the Dow Jones U.S. Industrials Index before fees and expenses.

The Russell 1000 Industrials 40 Act 15/22.5 Daily Capped Index measures the performance of the industrial sector of the U.S. equity market. It includes: construction & materials, aerospace & defense, general industrials, electronic & electrical equipment, industrial engineering, industrial transportation & support services. The Index is capitalization-weighted.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.41%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.94%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 57.10% of the portfolio. Information Technology and Materials round out the top three.

Looking at individual holdings, Visa Inc Class A (V) accounts for about 7.19% of total assets, followed by Mastercard Inc Class A (MA) and Accenture Plc Class A (ACN).

The top 10 holdings account for about 35.25% of total assets under management.

Performance and Risk

The ETF has lost about -13.02% and is down about -10.54% so far this year and in the past one year (as of 05/03/2022), respectively. IYJ has traded between $97.52 and $114.98 during this last 52-week period.

The ETF has a beta of 1.13 and standard deviation of 25.82% for the trailing three-year period, making it a medium risk choice in the space. With about 188 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Industrials 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, IYJ is a sufficient 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.

Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $4.39 billion in assets, Industrial Select Sector SPDR ETF has $14.45 billion. VIS has an expense ratio of 0.10% and XLI 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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iShares U.S. Industrials ETF (IYJ): ETF Research Reports
 
Accenture PLC (ACN) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Visa Inc. (V) : Free Stock Analysis Report
 
Vanguard Industrials ETF (VIS): ETF Research Reports
 
Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
 
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