The top five holdings of this ETF are Saia Inc (SAIA, 3.06% of assets), Chart Industries Inc (GTLS, 2.89%), Exponent Inc (EXPO, 2.58%), UFP Industries Inc (UFPI, 2.55%) and John Bean Technologies Corp (JBT, 2.51%).
Invesco S&P SmallCap Industrials ETF (PSCI)
From Sound Advice
Invesco S&P SmallCap Industrials ETF is bound to be a direct beneficiary of US infrastructure spending as well as a general increase in construction spending as the economy continues to open up and recover.
Its price action is based on the S&P SmallCap 600® Capped Industrials Index which is designed to measure the overall performance of the securities of U.S. industrial companies. These domestic companies are engaged in the business of providing industrial products and services, including engineering, heavy machinery, construction, electrical equipment, aerospace, and defense, as well as general manufacturing.
Smaller companies have smaller capitalizations (caps). This means they will reflect the positive impact more strongly than larger companies from an increase in infrastructure spending. Small cap construction companies are also typically domestic companies operating inside the U.S. It is likely that a government-sponsored program will stipulate that U.S. companies are to be employed to perform the services. Even absent such stipulations, construction projects tend to employ local companies as subcontractors even when general contractors are national companies.
This ETF rebalances its investments quarterly to maintain an equal weighting in its holdings. This strategy tends to improve and maintain diversification as well as deliver a stronger longer-term performance. The portfolio consists of 96 securities and assets, and it is more dispersed than the typical peer in the category.
Management has maintained an emphasis on stocks with low financial leverage and strong returns on equity. Since the inception of the PSCI in April 2010, this ETF has had an annual return of 13.5%. During the last 5 years, the annual return has been 16.6%. The accent is on growth. The current income is small, currently close to 1%.
Gray Cardiff, Sound Advice, soundadvice-newsletter.com, 800-825-7007, June 30, 2021