During a contentious March riddled with coronavirus-related challenges, new orders for key U.S.-made capital goods rose, but that trend may not hold moving forward. Social distancing restrictions thanks to stay-at-home orders could provide a major roadblock in next month’s data.
Per a CNBC report, “orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, edged up 0.1% last month, the Commerce Department said. Data for February was up to show these so-called core capital goods orders falling 0.8% instead of dropping 0.9% as previously reported.”
“Economists polled by Reuters had forecast core capital goods orders plunging 6.0% in March,” the report added. “U.S. durable goods orders sank 14.4% in the month, compared with expectations for an 11.9% drop. Durable goods orders rose 1.2% a month earlier.”
Investors looking to get exposure to the industrial sector can look at the Industrial Select Sector SPDR Fund (XLI). The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of publicly traded equity securities of companies in the Industrial Select Sector Index.
Under normal market conditions, the fund generally invests substantially all, but at least 95%, of its total assets in the securities comprising the index. The index includes securities of companies from the following industries: aerospace and defense; industrial conglomerates; marine; transportation infrastructure; machinery; road and rail; air freight and logistics; commercial services and supplies; etc.
Another option is the Vanguard Industrials Index Fund ETF Shares (VIS), which employs an indexing investment approach designed to track the performance of the MSCI US Investable Market Index (IMI)/Industrials 25/50. The index is made up of large, mid-size, and small U.S. companies within the industrials sector, as classified under the Global Industry Classification Standard (GICS).
A Revolutionary ETF Play in Manufacturing
Investors who want exposure to manufacturing with a technological tilt can look at exchange-traded funds like the Goldman Sachs Motif Manufacturing Revolution ETF (GMAN). GMAN seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Motif Manufacturing Revolution Index.
The fund seeks to achieve its investment objective by investing at least 80% of its assets in securities included in its underlying index. The index is designed to deliver exposure to companies with common equity securities listed on exchanges in certain developed markets that may benefit from the on-going technology-driven transformation of the manufacturing industry (the “Manufacturing Revolution Theme”).
Using a data-driven approach, the GS Motif ETFs seek to track bespoke1 indices created by Motif, an industry leader in applying data science and automation to thematic investing. Motif analyzes traditional and alternative data and weights companies by a function of ‘thematic beta’ to provide precise exposure to theme.
For more market trends, visit ETF Trends.
