Industrial  ETFs have also been boosted this year by a surprisingly strong performance out of the aerospace and defense sub-sector, something few investors predicted at the start of the year given that group’s vulnerability to government spending cuts. [Stealthy Aerospace ETF Soars]

“VIS invests 22% of its assets in aerospace and defense companies. Defense contractors in particular are more sensitive to government spending than the overall business cycle, and given ongoing sequestration, we expect defense spending to slow in coming years,” said Goldsborough.

VIS is not without competition, new or old. With annual fees of 0.14%, the ETF was once the least expensive among industrial funds, but the new Fidelity MSCI Industrials Index ETF (NYSEArca: FIDU) charges just 0.12% per year. [Fidelity’s New ETFs Put Vanguard on Alert]

While critics would be apt to say FIDU is too new or too small to merit consideration or that its perceived lack of liquidity implies added risk, those assessments are simply inaccurate. Regarding the liquidity issue, there is no reason FIDU with a top-10 lineup that is nearly a mirror image of VIS’, would lack for liquidity.

Vanguard Industrials ETF

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GE.