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Zacks: Industrial ETFs to Watch as Companies Report Earnings

Zacks: Industrial ETFs to Watch as Companies Report Earnings

(Dreamstime)

By    |   Monday, 31 October 2016 12:33 PM

Exchange-traded funds that focus on stocks of industrial companies have suffered in the past month as large-cap companies like General Electric Co. have reported mixed results, according to Zacks Investment Research.

“Though recent economic data indicated that the manufacturing sector is gradually improving to finish the fourth quarter on a higher note, concerns, including dismal global growth conditions and a stronger U.S. dollar, continue to pose threats to the sector,” Zacks says on Seeking Alpha.

Industrial ETFs are most likely to own stocks in GE, 3M Co., Honeywell International Inc. and Union Pacific Corp., which have faced pressure after reporting earnings. Zacks discusses four ETFs that own significant stakes in these companies.

  • Industrial Select Sector SPDR ETF (ticker: XLI): “General Electric occupies the top spot with 10.4 percent allocation, while 3M, Honeywell and Union Pacific have a combined exposure of roughly 15 percent in the fund,” Zacks says. “The fund has the highest exposure to aerospace & defense (22.3 percent), followed by industrial conglomerates (21.9 percent).”
  • Vanguard Industrials ETF (VIS): “The fund manages nearly $2.2 billion in its asset base and charges only 10 basis points in annual fees,” Zacks says. “From an industry perspective, it has the highest exposure to industrial conglomerates (20.6 percent), followed by aerospace and defense (19 percent).”
  • iShares U.S. Industrials ETF (IYJ): “The fund has top exposure to capital goods (57.3 percent), software & services (14.1 percent) and Transportation (12.1 percent),” according to Zacks. “It is slightly expensive with 44 basis points as fees.”
  • Fidelity MSCI Industrials Index ETF (FIDU): General Electric takes the top spot at 12 percent share, while 3M, Honeywell and Union Pacific have a combined exposure of almost 11.7 percent,” Zacks says. “It is one of the low-cost choices in the space, charging 8 bps in annual fees from investors.”
     

GE said on Monday it would merge its oil and gas business with No. 3 oilfield services provider Baker Hughes Inc.

GE will own 62.5 percent of the new publicly traded company, which will have combined revenue of $32 billion, while Baker Hughes shareholders will own 37.5 percent, according to Reuters.

Shareholders of Baker Hughes will get a special one-time cash dividend from GE of $17.50 a share after the deal closes.

 

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Exchange-traded funds that focus on stocks of industrial companies have suffered in the past month as large-cap companies like General Electric Co. have reported mixed results, according to Zacks Investment Research.
ETF, investing, fund, exchange
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2016-33-31
Monday, 31 October 2016 12:33 PM
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