Aerospace and defense stocks, such as Boeing Co. (NYSE:BA), have been major drivers of the industrial sector’s strength since the 2016 presidential election. Traditional industrial ETFs such as XLI feature significant aerospace and defense exposure.
The allure of late-cycle sectors, including industrials, in a rising rate environment remains in place. Industrials perform well when interest rates rise because rising rates can go hand-in-hand with economic growth. Increased infrastructure spending is also seen as a catalyst for industrial stocks and ETFs.
Investors pulled $1 billion from industrial ETFs last week, according to Bloomberg.
Rivals to XLI include the Fidelity MSCI Industrials Index ETF (NYSEArca: FIDU), iShares U.S. Industrials ETF (NYSEArca: IYJ) and the Vanguard Industrials ETF (NYSEArca: VIS).
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