After a long decline last summer, industrial stocks have turned around and are now outpacing the broader market.
The Vanguard Industrials ETF (VIS) is up 13% since September 1, 2011. That compares to an 8% rise for the broader equity market over the same time period. Even more impressive, VIS is up 28% from the low water mark set on October 1 compared to an 18% gain for the overall market.
A combination of an improving earnings outlook and an oversold condition seem to be driving the outperformance. Earnings of General Electric, the number one holding in the VIS portfolio, are benefiting from the exit of the company’s media business. Caterpillar, the third largest holding, has experienced strong performance as the comany digests its Bucyrus acquisition and continues to expand in high growth developing markets.
The $460 million VIS holds 372 industrial stocks with 40% of its portfolio concentrated in the top 10 positions. In addition to GE and CAT, other top holdings include United Technologies, 3M and UPS. The exchange traded fund has an SEC yield of 1.95% and an expense ratio of 0.19%.
For more ETF investing choices, see our list of industry ETFs.
– ETF MarketPro Staff
January 17, 2012