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Should You Invest in the iShares U.S. Industrials ETF (IYJ)?

Sector ETF report for IYJ

By
This story originally appeared on Zacks

Designed to provide broad exposure to the Industrials - Broad segment of the equity market, the iShares U.S. Industrials ETF (IYJ) is a passively managed exchange traded fund launched on 06/12/2000.

- Zacks

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.76 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. IYJ seeks to match the performance of the Dow Jones U.S. Industrials Index before fees and expenses.

The Russell 1000 Industrials 40 Act 15/22.5 Daily Capped Index measures the performance of the industrial sector of the U.S. equity market. It includes: construction & materials, aerospace & defense, general industrials, electronic & electrical equipment, industrial engineering, industrial transportation & support services. The Index is capitalization-weighted.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.76%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 56.30% of the portfolio. Information Technology and Materials round out the top three.

Looking at individual holdings, Visa Inc Class A (V) accounts for about 6.28% of total assets, followed by Mastercard Inc Class A (MA) and Paypal Holdings Inc (PYPL).

The top 10 holdings account for about 34.50% of total assets under management.

Performance and Risk

Year-to-date, the iShares U.S. Industrials ETF return is roughly 19.31% so far, and it's up approximately 17.25% over the last 12 months (as of 12/29/2021). IYJ has traded between $93.24 and $114.98 in this past 52-week period.

The ETF has a beta of 1.16 and standard deviation of 25.33% for the trailing three-year period, making it a medium risk choice in the space. With about 187 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Industrials ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IYJ is an outstanding option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $5.24 billion in assets, Industrial Select Sector SPDR ETF has $17.73 billion. VIS has an expense ratio of 0.10% and XLI charges 0.12%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.



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iShares U.S. Industrials ETF (IYJ): ETF Research Reports

 

Mastercard Incorporated (MA): Free Stock Analysis Report

 

Visa Inc. (V): Free Stock Analysis Report

 

Vanguard Industrials ETF (VIS): ETF Research Reports

 

Industrial Select Sector SPDR ETF (XLI): ETF Research Reports

 

PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report

 

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