5 Best Industrials ETFs for 2022

Written by Sean GraytokUpdated: 23rd Feb 2022
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VIS, XLI, ITA, JETS, and IYT are the five best industrials ETFs that you can buy.

Best Industrials ETFs: Overview

Industrials exchange-traded fundsprimarily consist of airlines, aerospace companies, shippers, waste management firms, and more.

Here are the five best industrials ETFs:

  • Vanguard Industrials ETF (VIS)
  • Industrials Select Sector SPDR Fund (XLI)
  • iShares U.S. Aerospace & Defense ETF (ITA)
  • U.S. Global Jets ETF (JETS)
  • iShares U.S. Transportation ETF (IYT)

VIS and XLI provide broad exposure to the entire sector, while ITA, JETS, and IYT focus on a specific piece of the industrial sector.

Below, we analyze each of these funds in more detail. Let’s get started.

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Best Industrials ETFs

#1. Vanguard Industrials ETF (VIS)

  • 1-Year Performance: +4.68%
  • Expense Ratio: 0.10%
  • Annual Dividend Yield: 1.11%
  • AUM: $4.5 billion
  • 3 Month Avg. Volume: 183,211
  • Number of Holdings: 356
  • Inception Date: 2004

The Vanguard Industrials ETF invests in approximately 350 stocks of U.S. companies within the industrials sector.

These companies are typically involved in the manufacture and distribution of capital goods, the provision of commercial services and supplies, or the provision of transportation services.

VIS might just be your best option amongst the broad-based industrials ETFs.

It represents the whole target sector across large, medium, and small-cap companies – all at one low fee.

VIS Top Holdings:

  • Union Pacific Corporation (UNP) 3.98%
  • United Parcel Services (UPS) 3.68%
  • Honeywell International (HON) 3.53%
  • Raytheon Technologies (RTX) 3.40%
  • Boeing (B.A.) 2.78%

#2. Industrials Select Sector SPDR Fund (XLI)

  • 1-Year Performance: +7.75%
  • Expense Ratio: 0.12%
  • Annual Dividend Yield: 1.23%
  • AUM: $16.68 billion
  • 3 Month Avg. Volume: 14,145,575
  • Number of Holdings: 75
  • Inception Date: 1998

The Industrials Select Sector SPDR Fund consists of the industrials sector of the S&P 500 Index, so it’s mostly invested in large-cap companies that are at the apex of their industry.

Here are the top sub-industries in XLI: machinery; aerospace and defense; industrial conglomerates; road and rail; and air freight & logistics.

The main difference between the previously discussed VIS and this fund is the S&P 500 inclusion criteria.

Generally speaking, VIS is more representative of the entire industrial sector, whereas XLI is more representative of the established industrial companies.

It essentially boils down to your preference for concentration.

XLI Top Holdings:

  • Union Pacific Corporation (UNP) 5.46%
  • United Parcel Services (UPS) 5.20%
  • Raytheon Technologies (RTX) 4.78%
  • Honeywell International (HON) 4.30%
  • Boeing (B.A.) 4.00%

#3. iShares U.S. Aerospace & Defense ETF (ITA)

  • 1-Year Performance: +6.44%
  • Expense Ratio: 0.42%
  • Annual Dividend Yield: 0.83%
  • AUM: $2.57 billion
  • 3 Month Avg. Volume: 246,142
  • Number of Holdings: 35
  • Inception Date: 2006

The iShares Aerospace & Defense ETF provides exposure to U.S. companies that manufacture commercial and military aircraft and other defense equipment.

The fund’s 35 holdings consist mostly of domestic aerospace and defense stocks.

Raytheon, Boeing, and Lockheed Martin are top holdings in VIS and XLI, but they’re majority holdings in ITA – accounting for a combined 46% of total net assets.

ITA is a specific type of industrials ETF, and it can be used to efficiently express a sector view.

ITA Top Holdings:

  • Raytheon Technologies (RTX) 22.26%
  • Boeing (B.A.) 18.60%
  • Lockheed Martin (LMT) 5.70%
  • Northrop Grumman (NOC) 4.79%
  • TransDigm Group (TDG) 4.70%

#4. U.S. Global Jets ETF (JETS)

  • 1-Year Performance: -12.15%
  • Expense Ratio: 0.60%
  • Annual Dividend Yield: 0.04%
  • AUM: $4.00 billion
  • 3 Month Avg. Volume: 12,386,448
  • Number of Holdings: 52
  • Inception Date: 2015

The U.S. Global Jets ETF provides access to the global airline industry, which includes airline operators and manufacturers from around the globe.

Popular airlines such as Delta, United, American, and others make up most of the holdings – about 75% of total assets – but the ETF invests in other businesses built around the airline industry.

This includes booking-related internet services, the transportation infrastructure at airports, and various other commercial services that help travelers and their luggage get from point A to B.

JETS is the one and only airline ETF on the market.

However, it’s one of the largest industrial ETFs on our list and another viable option if you’re looking for thematic exposure within the sector.

JETS Top Holdings:

  • Delta Air Lines (DAL) 10.49%
  • United Airlines (UAL) 10.28%
  • Southwest Airlines (LUV) 9.44%
  • American Airlines (AAL) 9.37%
  • Alaska Air (ALK) 3.24%

#5. iShares U.S. Transportation ETF (IYT)

  • 1-Year Performance: +10.44%
  • Expense Ratio: 0.42%
  • Annual Dividend Yield: 0.73%
  • AUM: $1.61 billion
  • 3 Month Avg. Volume: 189,769
  • Number of Holdings: 52
  • Inception Date: 2003

The U.S. Transportation ETF offers exposure to U.S. airline, railroad, and trucking companies.

Here’s a breakdown of the top sectors in IYT with their corresponding allocations: railroads (32%), air freight & logistics (30%), trucking (23%), airlines (14%), and marine (1%).

Much like the other iShares fund on our list, the iShares U.S. Aerospace & Defense ETF (ITA), this ETF is highly concentrated in the winners within the space.

Its top holdings – Union Pacific, UPS, and CSX Corp – account for 44% of total assets.

Again, this is not a broad-based industrial ETF, so we don’t think comparisons to VIS or XLI are valuable.

IYT should only be used if you’re seeking targeted access to domestic transportation stocks.

IYT Top Holdings:

  • Union Pacific (UNP) 19.03%
  • United Parcel Services (UPS) 18.12%
  • CSX Corporation (CSX) 9.18%
  • Norfolk Southern Corporation (NSC) 4.43%
  • Uber Technologies (UBER) 4.28%

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Alternatives to the Best Industrials ETFs

Here are some other industrials ETFs that may be of interest to you:

  • iShares U.S. Industrials ETF (IYJ)
  • iShares Global Industrials ETF (EXI)
  • Invesco Water Resources ETF (PHO)
  • ARK Space Exploration & Innovation ETF (ARKX)
  • First Trust Industrials/Producer Durables AlphaDEX Fund (FXR)
  • Invesco S&P 500 Equal Weight Industrials ETF (RGI)

The Invesco S&P 500 Equal Weight Industrials ETF (RGI) may be an attractive alternative to XLI if you like the S&P 500 inclusion criteria but would rather have equal weighting to those holdings.

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Best Industrials ETFs: FAQs

What is the best ETF for industrials?

Some of the best ETFs for industrials are the Vanguard Industrials ETF (VIS), the Industrials Select Sector SPDR Fund (XLI), and the iShares U.S. Aerospace & Defense ETF (ITA).

Does Vanguard have an industrials ETF?

The Vanguard Industrials ETF (VIS) is a low-cost, broad-based industrials ETF that invests in over 350 equities in the industrials sector. It has attracted around $4.50 billion in assets since its launch in 2004.

Is XLI a buy?

The Industrials Select Sector SPDR Fund (XLI) is a buy if you’re seeking exposure to transportation firms, manufacturers of goods, and providers of commercial and professional services in the United States.

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Bottom Line: Best Industrials ETFs

There you have it – the best industrials ETFs. Hopefully, one of these funds aligns with your investment objectives.

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This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we selected the best industrials ETFs.

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.