General Electric, whose shares have climbed 17% in the past three months, is still down by more than half over the past year, suggesting there’s plenty of room to rise. GE, United Technologies and 3M are the three-largest holdings of the Dow Jones U.S. Industrial Sector Index Fund(IYJ), which jumped 18% in April alone.
The most attractive industrial ETF, based on its holdings’ price-to-earnings ratio, is the PowerShares Dynamic Industrials Sector Portfolio (PRN), which owns only U.S. stocks. The fund’s 60 members trade at an average of 11 times earnings. (Inverse and leveraged funds have been excluded from this review.)
Holdings of PowerShares Dynamic Industrials Sector Portfolio include GT Solar International(SOLR), Chart Industries(GTLS), EnerSys(ENS), Flowserve(FLS) and Goodrich(GR).
PowerShares Dynamic Industrials Sector Portfolio has fallen 0.6% so far this year, lagging behind some of its peers. First Trust Industrials/Producer Durables AlphaDEX Fund(FXR) has risen 5.6% over the same period, but is now potentially overvalued with a price-to-earnings ratio that’s twice as high at 22.
The best-performing international industrial ETFs this year are the SPDR S&P International Industrials Sector ETF(IPN), up 6.8%, and WisdomTree International Industrial Sector Fund(DDI), up 3.1%.
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