Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
IShares U.S. Industrials ETF IYJ is an exchange-traded fund that offers investors broad market-cap-weighted exposure to the industrials sector. IYJ owns large- and mid-cap industrials companies which are very sensitive   Read more 

Bull Case

As the economic recovery continues, late-cycle firms in this ETF could shine.
Many of the industrials firms held in this ETF have made themselves leaner and more efficient since the downturn.
Generally healthy macroeconomic conditions, particularly in the U.S., have helped to offer nice tailwinds to industrials firms in the form of decent demand and pricing across most subsectors. An ongoing (since mid-2013) expansion in global trade has helped many firms as well, and investors are extrapolating these trends out over the long run. Read more 

Bear Case

The aerospace and U.S. nonresidential construction segments have continued to struggle.
IYJ's expense ratio is much higher than that of two other peer funds, whose performance is almost perfectly correlated with that of IYJ. As a result, investors might want to consider those cheaper options.
Defense companies currently are facing reduced government spending because of U.S. budget sequestration. Read more 

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