Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Investors seeking industrials-sector exposure can consider the sector-specific exchange-traded fund Industrial Select Sector SPDR XLI. This ETF holds aerospace and defense firms, machinery companies, industrial conglomerates,  Read more 

Bull Case

This ETF is very liquid, with an average of 9.9 million shares traded daily.
The automotive, manufacturing, and homebuilding segments of the U.S. industrials sector all have posted very strong results of late. Europe's industrials sector also has rebounded some.
As the economic recovery continues, many of the late-cycle firms in this ETF should shine. Read more 

Bear Case

Production and orders have revealed tepid recent demand from U.S. manufacturers.
The aerospace and U.S. nonresidential construction segments have continued to struggle.
Defense companies can alter the expected cyclical performance of XLI and currently are facing reduced government spending because of sequestration. Read more 

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