Investors looking to capitalize on the ongoing resurgence in U.S. manufacturing should consider investing in exchange-traded funds (ETFs) that offer exposure to a diversified range of sectors. According to Bank of America’s ETF strategist Jared Woodard, the trend of increasing interest in this theme has been driven by escalating trade tensions and bipartisan efforts to revitalize domestic manufacturing. Traditional sector-focused funds may not adequately capture this theme, so Woodard suggests looking at ETFs with a broader scope.
Woodard’s top recommendation in this space is the First Trust RBA American Industrial Renaissance ETF (AIRR). Launched in 2014, AIRR has garnered approximately $1.4 billion in assets and has outperformed the S&P 500 index over the past decade. With top holdings including companies like Mueller Industries and Granite Construction, AIRR provides exposure to small and mid-cap stocks. Despite having a higher expense ratio compared to other funds, AIRR boasts the best risk-adjusted returns over a five-year period.
Ranked second on Bank of America’s list is the Global X US Infrastructure ETF (PAVE), which focuses more on industrial and materials stocks. With top holdings such as Trane Technologies and United Rentals, PAVE screens for companies involved in construction, engineering, and industrial transportation sectors. Although PAVE was launched in 2017, it has quickly amassed nearly $8 billion in assets and has delivered an average annualized return of over 20% in the past five years. With a lower management fee than AIRR, PAVE offers investors a cost-effective option to gain exposure to the U.S. manufacturing rebound.
Investing in ETFs that capture the resurgence of U.S. manufacturing can be a strategic move for investors seeking to capitalize on this trend. By diversifying across different sectors and companies, investors can mitigate risk and potentially benefit from the growth potential of the manufacturing sector. Both AIRR and PAVE offer unique opportunities to gain exposure to this theme, with each fund having its own set of advantages and considerations. As always, investors should conduct thorough research and consult with financial advisors before making investment decisions to ensure that their portfolios align with their financial goals and risk tolerance.