Industrial and Capital Goods ETF: The Top Exchange Traded Fund for Your Investing Watchlist

Markets are on a nice run as Weekly Unemployment Claims are dropping into new territory, retail sales data (NYSE:XRT) was positive, and Oil (NYSE:USO) is taking a breather. But Capital Goods and Industrials (NYSE:XLI) are leading the charge.

Anytime you have signs of a strengthening economy, capital goods will cycle higher. Add a pullback in energy (NYSE:XLE) input costs, and you have a recipe for a nice trading day for the sector.

Here is the most heavily traded ETF for Capital Goods and Industrials:

1) Industrial SPDR Exchange Traded Fund (NYSE:XLI): This is the grand-daddy trading vehicle for diversified exposure. The XLI trades ~10.5 million shares a day, so liquidy is excellent. This ETF corresponds to the price and yield performance of the Industrial Select Sector of the S&P 500 Index — the best companies in the sector. Industries in the Index include aerospace and defense, building products, construction and engineering, electrical equipment, conglomerates, machinery, commercial services and supplies, air freight and logistics, airlines, marine, road and rail, and transportation infrastructure companies.

The top 9 holdings are:

General Electric Company (NYSE:GE) 11.58%
United Technologies Corporation (NYSE:UTX) 5.68%
United Parcel Service, Inc. (NYSE:UPS) 5.26%
Caterpillar, Inc. (NYSE:CAT) 4.79%
3M Company (NYSE:MMM) 4.70%
Boeing (NYSE:BA) 3.88%
Union Pacific Corporation (NYSE:UNP) 3.70%
Emerson Electric Company (NYSE:EMR) 3.42%
Honeywell International Inc. (NYSE:HON) 3.36%

Given that the top capital goods and industrial companies are global, it’s hard to have enough information to deal with the sector if you are looking for short term trades or long term low-risk exposure. Next time you are in such a situation, give XLI a look.