In recent years, there has been an increased interest in investing in U.S. manufacturing, driven by rising trade tensions and efforts to boost domestic production. Both Republicans and Democrats have been pushing for policies that support the expansion of the manufacturing sector. Bank of America’s ETF strategist, Jared Woodard, recently launched coverage of funds that track this theme, highlighting the potential for investors to capitalize on the rebound in U.S. manufacturing.
Traditional sector funds may not fully capture the potential growth in U.S. manufacturing, as they are limited in scope. Bank of America suggests that investors consider ETFs that offer exposure to a wide range of sectors within manufacturing. One such ETF is the First Trust RBA American Industrial Renaissance ETF (AIRR), which has outperformed the S & P 500 over the past decade with about $1.4 billion in assets. The fund’s top holdings include companies such as Mueller Industries and Granite Construction, providing a diversified approach to investing in the industrial sector.
Another ETF recommended by Bank of America is the Global X US Infrastructure ETF (PAVE), which is more focused on industrial and materials stocks. With top holdings in companies like Trane Technologies and United Rentals, PAVE offers exposure to companies involved in construction, engineering, and industrial transportation. Despite having a shorter track record than AIRR, PAVE has demonstrated strong performance with an average annualized return of over 20% in the past five years.
When considering investing in U.S. manufacturing ETFs, investors should evaluate the potential risks and rewards associated with each fund. While AIRR offers exposure to small and mid-cap companies with a higher expense ratio, PAVE provides a more diversified portfolio with a lower management fund. Both ETFs present opportunities for investors to capitalize on the growth in U.S. manufacturing, but careful consideration of the investment objectives and risk tolerance is essential in making informed decisions.
The resurgence of U.S. manufacturing presents an attractive investment opportunity for investors looking to capitalize on the sector’s growth potential. By considering ETFs like AIRR and PAVE, investors can gain exposure to a diversified portfolio of companies involved in the industrial sector. As trade tensions continue to impact global markets, investing in U.S. manufacturing ETFs could provide a strategic way to navigate market volatility and capitalize on the resurgence of domestic production.