5 Best Industrial ETFs

In this article, we discuss 5 best industrial ETFs. If you want to read our detailed discussion on the industrials sector, head over to 10 Best Industrial ETFs. 

5. Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN)

5-Year Performance as of August 14: 65.50%

Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN) mirrors the performance of the S&P 500® Equal Weight Industrials Index, which evenly distributes the weight of stocks within the industrials sector of the S&P 500 Index. This ETF was introduced on November 1, 2006. As of August 11, 2023, Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN) offers an expense ratio of 0.40%, and its portfolio consists of 77 stocks. It is one of the best industrial ETFs to watch. 

Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is the largest holding of Invesco S&P 500® Equal Weight Industrials ETF (NYSE:RSPN). It is a prominent less-than-truckload (LTL) motor carrier in the United States and North America. The company specializes in providing regional, inter-regional, and national LTL services, including expedited transportation. On July 20, Old Dominion Freight Line, Inc. (NASDAQ:ODFL) declared a $0.40 per share quarterly dividend, in line with previous. The dividend is payable on September 29, to shareholders of record on September 6. 

According to Insider Monkey’s first quarter database, 37 hedge funds were bullish on Old Dominion Freight Line, Inc. (NASDAQ:ODFL), compared to 34 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 292,753 shares worth approximately $100 million. 

The London Company Large Cap Strategy made the following comment about Old Dominion Freight Line, Inc. (NASDAQ:ODFL) in its first quarter 2023 investor letter:

“Old Dominion Freight Line, Inc. (NASDAQ:ODFL) – ODFL outperformed during Q1, reflecting strong operating performance in a negative freight market. ODFL has a relentless focus on service and quality, which resonates with customers in good times and bad. Management’s focus on cost containment this quarter resulted in record levels of profitability, and the company continues to execute on its long-term growth plan. ODFL is widely held as one of the best franchises in transportation.”

4. Invesco DWA Industrials Momentum ETF (NASDAQ:PRN)

5-Year Performance as of August 13: 69.66%

Invesco DWA Industrials Momentum ETF (NASDAQ:PRN) follows the performance of the Dorsey Wright® Industrials Technical Leaders Index. This ETF was established on October 12, 2006. As of August 11, 2023, the net expense ratio for The Invesco DWA Industrials Momentum ETF came in at 0.60%. The fund’s portfolio comprises 45 stocks. 

Builders FirstSource, Inc. (NYSE:BLDR) is a prominent holding of Invesco DWA Industrials Momentum ETF (NASDAQ:PRN). Builders FirstSource, Inc. (NYSE:BLDR) manufactures and markets building materials, manufactured elements, and construction services across the United States. On August 2, Builders FirstSource, Inc. (NYSE:BLDR) reported a Q2 non-GAAP EPS of $3.89 and a revenue of $4.53 billion, outperforming Wall Street expectations by $1.30 and $290 million, respectively. 

According to Insider Monkey’s first quarter database, Builders FirstSource, Inc. (NYSE:BLDR) was part of 51 hedge fund portfolios, compared to 52 in the last quarter. Ben Jacobs’ Anomaly Capital Management is the largest stakeholder of the company, with 1.5 million shares worth $137.4 million. 

Black Bear Value Partners made the following comment about Builders FirstSource, Inc. (NYSE:BLDR) in its first quarter 2023 investor letter:

“Builders FirstSource, Inc. (NYSE:BLDR) is a manufacturer and supplier of building materials with a focus on residential construction. Historically this business was cyclical with minimal pricing power as the primary products sold were lumber and other non-value-add housing materials. Since the GFC, BLDR has focused on growing their value-add business that is now 40%+ of the topline. The company has modest leverage and has been using their abundant free-cash-flow to buy in over 30% of the stock in the last 18 months.

While mortgage rates are higher, they are not unusual versus history. The low rates of the last 5-10 years are the outlier. We have a structural shortage of housing in the USA. With existing homeowners locked into low rate mortgages, the aspiring homeowner may increasingly need to find a home from a homebuilder. The next 6-12 months could be rocky as people adjust to the increase in pricing and rates. Eventually the housing market should adjust to the new normal (or rates could go down).

Normalized free-cash-flow per share looks to be in the range of $8-$12 per year. At quarter end pricing of ~$89 that implies a free-cash-flow yield of 9-13%. If we owned this business privately and someone offered us this annual cash-flow yield, we would be jumping at it!”

3. Invesco Dynamic Building & Construction ETF (NYSE:PKB)

5-Year Performance as of August 14: 81.07%

Invesco Dynamic Building & Construction ETF (NYSE:PKB) tracks the progress of the Dynamic Building & Construction Intellidex Index. This index is composed of 30 American building and construction stocks. Established on October 26, 2005, Invesco Dynamic Building & Construction ETF (NYSE:PKB) currently holds a portfolio of 31 stocks and features an expense ratio of 0.57% as of August 11, 2023. It is one of the best industrial ETFs to invest in. 

PulteGroup, Inc. (NYSE:PHM) is the top holding of Invesco Dynamic Building & Construction ETF (NYSE:PKB). It is primarily involved in the homebuilding sector within the United States. The company provides a range of home designs, encompassing single-family detached houses, townhomes, condominiums, and duplexes. On July 25, PulteGroup, Inc. (NYSE:PHM) reported a Q2 GAAP EPS of $3.21 and a revenue of $4.19 billion, outperforming Wall Street estimates by $0.71 and $170 million, respectively. 

According to Insider Monkey’s first quarter database, 36 hedge funds were long PulteGroup, Inc. (NYSE:PHM), compared to 30 funds in the last quarter. Harris Associates is the largest stakeholder of the company, with 5.7 million shares worth roughly $335 million. 

Here is what Miller Value Partners specifically said about PulteGroup, Inc. (NYSE:PHM) in its Q2 2022 investor letter:

“Homebuilders and financials, the worst losers during the Financial Crisis crash, plummeted. Some homebuilders, like PulteGroup, Inc. (NYSE:PHM), traded down to half their financial crisis lows despite reporting housing improvements for the first time. Fear ruled in the short term, but fundamentals ultimately prevailed. Homebuilders were top performers in 2012 posting triple-digit increases in some cases. Opportunity Equity was a top performer that year.”

2. Invesco Water Resources ETF (NASDAQ:PHO)

5-Year Performance as of August 14: 82.33%

Invesco Water Resources ETF (NASDAQ:PHO) tracks the performance of the NASDAQ OMX US Water Index. This index aims to monitor the progress of US-listed firms that are involved in water conservation and purification in residential, commercial, and industrial settings. Established on June 12, 2005, Invesco Water Resources ETF (NASDAQ:PHO) offers an expense ratio of 0.59% and holds a portfolio of 39 stocks as of August 11. It is one of the best industrial ETFs to monitor. 

Ecolab Inc. (NYSE:ECL) is the largest holding of Invesco Water Resources ETF (NASDAQ:PHO).Ecolab Inc. (NYSE:ECL) provides solutions and services for water management, hygiene, and infection prevention worldwide. The company’s operations are divided into three segments – Global Industrial, Global Institutional & Specialty, and Global Healthcare & Life Sciences. On August 3, Ecolab Inc. (NYSE:ECL) declared a $0.53 per share quarterly dividend, in line with previous. The dividend is distributable on October 16, to shareholders of record on September 19. 

According to Insider Monkey’s first quarter database, 53 hedge funds were bullish on Ecolab Inc. (NYSE:ECL), compared to 47 funds in the prior quarter. Bill & Melinda Gates Foundation Trust held the largest position in the company, comprising 5.2 million shares worth $863.7 million. 

Madison Sustainable Equity Fund made the following comment about Ecolab Inc. (NYSE:ECL) in its second quarter 2023 investor letter:

“Ecolab Inc. (NYSE:ECL) is benefiting from price increases put in place last year to offset inflationary pressures. The price increases more than offset flattish volumes and are modestly ahead of raw material inflation resulting in a return to earnings growth. We believe that Ecolab’s profitability will improve going forward from market share gains and its fast-growing bioprocessing business.”

1. First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR)

5-Year Performance as of August 13: 98.98%

First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR) aims to achieve investment outcomes that generally mirror the price and yield performance of the Richard Bernstein Advisors American Industrial Renaissance® Index. Established on March 10, 2014, the ETF offers an expense ratio of 0.70%. As of August 11, 2023, First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR)’s portfolio comprises 49 stocks. It is one of the best ETFs to buy. 

Sterling Infrastructure, Inc. (NASDAQ:STRL) is the largest holding of First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR). Sterling Infrastructure, Inc. (NASDAQ:STRL) is involved in e-infrastructure, transportation, and construction solutions, focusing on the United States market. On August 7, Sterling Infrastructure, Inc. (NASDAQ:STRL) reported a Q2 GAAP EPS of $1.27, beating market consensus by $0.34. The revenue increased 13.1% year-over-year to $522.3 million. 

According to insider Monkey’s first quarter database, 17 hedge funds were bullish on Sterling Infrastructure, Inc. (NASDAQ:STRL), compared to 19 funds in the preceding quarter. Chuck Royce’s Royce & Associates is the leading stakeholder of the company, with 512,419 shares worth $19.4 million. 

Here is what Wasatch Micro Cap Value Fund has to say about Sterling Infrastructure, Inc. (NASDAQ:STRL) in its Q1 2021 investor letter:

“The first is Sterling Construction Co., Inc. (STRL), which specializes in higher-margin work on highways, bridges, airports, water and sewer facilities, light-rail projects, flat concrete for subdivisions and foundations for data centers. For companies such as Sterling, we like to look at a metric known as EV (enterprise value) to EBITDA. Sterling’s EV to EBITDA ratio is about 7, which we think is inexpensive compared to competitors. Moreover, we believe the stock could benefit not only from increased construction business but also from investors’ willingness to accept a much higher EV to EBITDA ratio.”

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