ETFs poised to benefit from U.S. manufacturing growth
- Bank of America highlights the potential of ETFs that invest in U.S. manufacturing as the sector rebounds, driven by trade policies and bipartisan support for domestic production.
- The First Trust RBA American Industrial Renaissance ETF (AIRR) is recommended for its strong performance, small and mid-cap exposure, and a decade-long track record of outperforming the S&P 500.
- The Global X US Infrastructure ETF (PAVE) is also noted for its focus on industrial and materials stocks, boasting significant assets and impressive returns over the past five years.
In a recent publication, Bank of America discussed the growing interest in exchange-traded funds (ETFs) that focus on U.S. manufacturing, a sector poised for growth amid rising trade tensions and government initiatives to bolster domestic production. The bank's ETF strategist, Jared Woodard, noted that traditional sector funds often fail to encapsulate the broader manufacturing theme, leading to a preference for ETFs with a wider scope. The First Trust RBA American Industrial Renaissance ETF (AIRR) was identified as a top choice, having launched in 2014 and currently managing approximately $1.4 billion in assets. AIRR has consistently outperformed the S&P 500 over the past decade, with a diverse portfolio that includes companies like Mueller Industries and Granite Construction. Despite having the highest expense ratio in its category at 0.70%, it offers the best five-year risk-adjusted returns. Another recommended fund is the Global X US Infrastructure ETF (PAVE), which focuses more heavily on industrial and materials stocks. Launched in 2017, PAVE has nearly $8 billion in assets and has achieved an average annualized return exceeding 20% over the last five years. Its holdings include major players like Trane Technologies and United Rentals, emphasizing revenue generation from construction and related sectors. Overall, the insights from Bank of America suggest that investors looking to capitalize on the resurgence of U.S. manufacturing should consider these ETFs, which are well-positioned to benefit from ongoing investments in infrastructure and industrial growth.