“Fundamental indicators reflect support for the aerospace and defense industry, a key space in the industrials sector,” according to ETF Daily News. “Demand appears strong for aircraft globally. Additionally, with corporate tax-cuts in the U.S., we expect stronger demand for smaller airplanes to grow. Finally, an increase in defense spending domestically should also bode well for the industry.”
Increased infrastructure spending could also boost industrial ETFs. While he was campaigning, President Donald Trump’s pledge to spend $1 trillion shoring up U.S. infrastructure needs was seen as a potential catalyst for the related exchange traded funds. Still, it could take some time for infrastructure ETFs to see the full benefit of Trump’s still nascent infrastructure plans.
“Other industrial industries should also benefit from growing demand as global economies improve and stabilize. As demand and output remain stable, transports should see support. A successful infrastructure spending bill would provide a further boost to equities in the industrial sector,” according to ETF Daily News.
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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