Industrials Sector: Overview and Funds

The industrials sector is comprised of companies that provide commercial and industrial products and services. The industrials sector is similar to the materials sector, but there are two key differences. First, the products manufactured by companies in the industrials sector are not raw materials. For example, a company that produces farming tractors would be classified in industrials, but a mining company would be classified in materials. Second, the industrials sector includes companies that provide products and services, whereas companies in the materials sector mainly create products. The industrials sector is broken into three major industries: capital goods, commercial and professional services and transportation. 

Capital Goods

Companies in the capital goods industry provide commercial and industrial products, such as defense equipment and industrial and agricultural machinery and engineering, commercial construction and trading services. Capital goods are any products or assets that are not sold to consumers, but are instead used to produce other goods. For example, a tractor that is used to fertilize crops is considered a capital good because it helps in the production of food products.

IndustrySub-IndustryDescription
Aerospace & Defense Aerospace & Defense Companies that make civil or military aerospace and defense equipment, such as planes. This includes defense electronics, such as radar, and space equipment.
Building Products Building Products Companies that make building and home improvement products. This excludes lumber/plywood and cement, which are classifed in the materials sector.
Construction & Engineering Construction & Engineering Companies that construct non-residential structures, such as commercial buildings. This includes civil engineering (bridges, etc.) and large contractors. Companies that construct residential buildings are part of the consumer discretionary sector.
Electrical Equipment Electrical Components & Equipment Companies that make electrical cables and wires and other small electrical equipment.
Heavy Electrical Equipment Companies that make power generators and other heavy electrical equipment. This includes turbines and large electrical systems.
Industrial Conglomerates Industrial Conglomerates Companies with activities in three or more industrial sectors, and no single activity makes up the majority of the revenue.
Machinery Construction Machinery & Heavy Trucks Companies that produce heavy duty trucks, machinery and construction equipment. This includes commercial and industrial shipbuilding.
Agricultural & Farm Machinery Companies that produce agricultural and farm machinery and related products. This includes tractors, grain dryers and machinery used for planting and fertilizing.
Industrial Machinery Companies that produce industrial machinery, such as presses, compressors, elevators, escalators, insulators and machine tools.
Trading Companies & Distributors Trading Companies & Distributors Companies that trade, wholesale or distribute industrial equipment, but do not make equipment.

Examples of companies in the capital goods industry include Boeing, Honeywell, 3M Company, Caterpillar, General Electric, Corning and Lockheed Martin.

Commercial and Professional Services

Companies in the commercial and professional services industry provide printing, office, security, facility, human resources, consulting and research services to other companies. This includes services like catering, armored vehicles, office cleaning and waste disposal. These types of companies can be considered "business to business" (or B2B) service providers.

IndustrySub-IndustryDescription
Commercial Services & Supplies Commercial Printing Companies that provide commercial printing services. This includes media printing, such as the printing of magazines or books.
Environmental & Facilities Services Companies that provide environmental and facilities management services. This includes waste disposal and pollution control.
Office Services & Supplies Companies that provide office services or that produce office supplies and equipment and that are not classified elsewhere.
Diversified Support Services Companies that provide support services for commercial and government use. This includes office cleaning, catering, transaction processing, uniform rental and building repair and maintenance.
Security & Alarm Services Companies that provide security services for commercial and government use. This includes prisons, security systems, armored vehicles, and security guards. Security software and home security are excluded.
Professional Services Human Resource & Employment Services Companies that provide human capital services for commercial use. This includes employment agencies, temp agencies, payroll services and employee benefit administrators.
Research & Consulting Services Companies that provide research and consulting services for commercial and government use. This includes management consulting, architecture, marketing and research. This excludes IT consulting, which is classified in information technology sector.

Companies that provide commercial and professional services include ADT, Waste Management Inc., Nielsen, Pitney-Bowes, Robert Half International and Verisk Analytics.

Transportation

The transportation industry includes companies that provide both commercial and passenger transportation and mail, freight and carrier services. This also includes companies that may manage infrastructure, such as roads, bridges, tunnels or railroads.

IndustrySub-IndustryDescription
Air Freight & Logistics Air Freight & Logistics Companies that provide package and mail delivery services, including air freight, courier and logistic services.
Airlines Airlines Companies that provide passenger air transportation.
Marine Marine Companies that provide commercial and passenger water transportation. This excludes cruise ships, which are classified in the consumer discretionary sector.
Road & Rail Railroads Companies that provide commercial and passenger rail transportation.
Trucking Companies that provide commercial and passenger vehicle transportation, including trucking companies, rental car companies and taxi services.
Transportation Infrastructure Airport Services Companies that manage or operate airports.
Highways & Railtracks Companies that own or manage roads, tunnels and railways.
Marine Ports & Services Companies that own or manage marine ports.

Examples of transportation companies are Delta Air Lines, FedEx, J.B. Hunt Transportation, American Airlines, Union Pacific and Kansas City Southern.

Industrials Sector ETFs and Mutual Funds

Below, we list 54 mutual funds, index funds and ETFs that cover the industrials sector. Many of these funds specialize in a sub-industry in the sector: aerospace and defense, capital goods, transportation, shipping, drones and more. Some of these funds may track also companies and industries outside of the industrials sector. The expense ratios for these funds start at 0.10% and go up to 2.35%.

NameSymbolExpense Ratio
Vanguard Industrials ETF VIS 0.10%
Vanguard Industrials Index Admiral Shares VINAX 0.10%
Fidelity MSCI Industrials ETF FIDU 0.12%
Industrial Select Sector SPDR XLI 0.14%
PowerSHares S&P SmallCap Industrials ETF PSCI 0.29%
SPDR S&P Transportation ETF XTN 0.35%
SPDR S&P Aerospace & Defense ETF XAR 0.35%
Guggenheim S&P Equal Weight Industrials ETF RGI 0.40%
SPDR S&P International Industrial Sector ETF IPN 0.40%
iShares U.S. Aerospace & Defense ETF ITA 0.43%
iShares Transportation Average IYT 0.43%
iShares U.S. Industrials ETF IYJ 0.43%
iShares Global Industrials ETF EXI 0.47%
WisdomTree Japan Hedged Capital Goods ETF DXJC 0.48%
Market Vectors Environmental Services ETF EVX 0.55%
First Trust ISE Water ETF FIW 0.59%
U.S. Global Jets ETF JETS 0.60%
PowerShares DWA Industrials Momentum ETF PRN 0.60%
PowerShares Water Resources ETF PHO 0.61%
First Trust Industrials/Producer Durables AlphaDEX ETF FXR 0.63%
Guggenheim S&P Global Water ETF CGW 0.64%
Guggenheim Shipping ETF SEA 0.65%
Global X China Industrials ETF CHII 0.65%
PowerShares Aerospace & Defense ETF PPA 0.66%
First Trust RBA American Industrial Renaissance ETF AIRR 0.70%
PureFunds Drone Economy Strategy ETF IFLY 0.75%
PowerShares Global Water ETF PIO 0.76%
Fidelity® Select Industrial Equipment Portfolio FSCGX 0.77%
Fidelity® Select Industrials FCYIX 0.78%
Fidelity Advisor® Industrials Fund Class I FCLIX 0.79%
Fidelity® Select Defense & Aerospace Portfolio FSDAX 0.79%
Fidelity® Select Transportation FSRFX 0.81%
Fidelity® Select Air Transportation Portfolio FSAIX 0.83%
Fidelity® Select Environment and Alternative Energy Portfolio FSLEX 0.92%
ProShares Ultra Industrials UXI 0.95%
ARK Industrial Innovation ETF ARKQ 0.95%
ProShares UltraShort Industrials SIJ 0.95%
Putnam Global Industrial Fund Class Y PGILX 1.02%
T. Rowe Price Global Industrials RPGIX 1.05%
Fidelity Advisor® Industrials Fund Class A FCLAX 1.06%
Putnam Global Industrial Fund Class A PGIAX 1.27%
Fidelity Advisor® Industrials Fund Class T FCLTX 1.32%
Rydex Transportation Investor Class RYPIX 1.35%
ICON Industrials Fund Class S ICTRX 1.50%
Putnam Global Industrial Fund Class R PGIOX 1.52%
Rydex Transportation Fund Class A RYTSX 1.60%
ICON Industrials Fund Class A ICIAX 1.75%
Putnam Global Industrial Fund Class M PGIHX 1.77%
Fidelity Advisor® Industrials Fund Class C FCLCX 1.81%
Fidelity Advisor® Industrials Fund Class B FCLBX 1.85%
Rydex Transportation Fund Class H RYPAX 1.85%
Putnam Global Industrial Fund Class C PGIEX 2.02%
Putnam Global Industrial Fund Class B PGIVX 2.02%
Rydex Transportation Fund Class C RYCNX 2.35%

Before you buy a fund, always research the fund. You should consider factors such as the investment strategy, underlying components, historical returns and fees and loads of the fund. You should also account for your current investment portfolio allocation and strategy. 

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