XLI ETF Explained: Returns, Expense Ratio, Holdings, and Alternative ETFs
The Industrial Select Sector SPDR ETF (XLI) is a passive sector ETF that spreads market-cap-weighted investments across cyclical U.S. industries, including aerospace, defense, machinery, and transportation. Its strengths are a low expense ratio, quarterly dividends, and abundant liquidity, and the key selection criterion is how it differs from defense-focused ETFs.
SubscribeWhat Is the Industrial Select Sector SPDR ETF?
This sector ETF tracks an index made up of the industrial sector companies within the S&P 500. It gives investors exposure to core areas of the U.S. industrial economy, including aerospace and defense, machinery, ground and air transportation, industrial conglomerates, and commercial and professional services.
It suits sector rotation investors who want to concentrate on U.S. economic recovery phases or the industrial and manufacturing cycle.
The ETF is passively managed (index tracking) by State Street.
How Do You Invest in the Industrial Select Sector SPDR ETF?
| Item | Details |
|---|---|
| Tracked index | Industrial Select Sector Index |
| Management style | Passive (index tracking) |
| Rebalancing frequency | Quarterly |
| Dividend frequency | Quarterly |
| Issuer | State Street |
| Expense ratio | 0.08% |
The fund is managed by replication, holding the industrial sector stocks of the S&P 500 in proportion to their market capitalization. It follows the index composition as is, without separate stock selection, and rebalancing is applied quarterly under the index rules, so the fund tracks the performance of the industrial sector as a whole.
- Abundant liquidity and narrow bid-ask spreads among sector ETFs
- Low expense ratio
Industrial Select Sector SPDR ETF Size and Costs (AUM and Expense Ratio)
Assets under management (AUM) stand at $31.5B, and the expense ratio is 0.08% per year.
It holds an edge in trading liquidity over comparable industrial ETFs, and its cost burden is also on the low side.
Industrial Select Sector SPDR ETF Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeThe industrial sector reacts sensitively to the economic cycle and manufacturing indicators. It tends to show relative strength during economic expansions, while volatility rises when concerns about a slowdown grow. Aerospace and defense demand and the infrastructure investment environment influence the trend.
Capital tends to flow into the industrial sector when structural themes such as reshoring, infrastructure investment, and defense demand come into focus. Conversely, when signs of an economic slowdown appear, money moves toward defensive sectors, which can increase the volatility of fund flows.
Industrial Select Sector SPDR ETF Pros and Cons
Its strengths are a low expense ratio, abundant liquidity, and diversified exposure across industrials, while its high sensitivity to the economic cycle is a drawback.
💪 Key Strengths
⚠️ Points to Watch
Industrial Select Sector SPDR ETF Alternatives and Related Products
ITA, PPA, and XAR, shown in the table, are ETFs that focus on aerospace and defense within industrials, so their exposure is narrower than that of XLI, which diversifies across industrials as a whole. Direct substitutes that broadly track the same industrial sector include VIS and FIDU. If you want to reduce large-cap concentration by using equal weighting instead of market-cap weighting, RSPN is also worth considering.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 ITA | iShares U.S. Aerospace & Defense ETF | $209.74 | -2.1% | $12.5B | 0.37% | 0.27% | -2.6% |
 AIRR | First Trust RBA American Industrial Renaissance ETF | $98.57 | -3.1% | $8.6B | 0.69% | 0.1% | -0.6% |
 PPA | Invesco Aerospace & Defense ETF | $158.65 | -2.2% | $7.7B | 0.58% | 0.42% | +1.0% |
 XAR | State Street SPDR S&P Aerospace & Defense ETF | $227.37 | -3.4% | $5.3B | 0.35% | 0.18% | -8.2% |
 IYT | iShares U.S. Transportation ETF | $81.61 | +0.0% | $2.0B | 0.37% | 0.93% | +14.2% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
| CAT | Caterpillar Inc | 0.15% | $622.75 | -3.8% | $286.3B | 24.4 | 1% |
| GE | GE Aerospace | 0.13% | $301.80 | -3.6% | $311.9B | 34.9 | 0.6% |
| GEV | GE Vernova Inc | 0.10% | $857.87 | -3.4% | $227.1B | 22.5 | 0.23% |
| RTX | RTX Corp | 0.10% | $199.80 | +0.2% | $269.6B | 32.5 | 1.44% |
| BA | Boeing Co | 0.06% | $171.55 | -0.6% | $135.9B | 18.9 | 0.02% |
Industrial Select Sector SPDR ETF Investor Checkpoints
Here are the points to review before investing in XLI. Because this ETF is concentrated in the industrial sector, it is important to check its sensitivity to the economic cycle, stock concentration, and costs in advance.
| Checkpoint | What to Check | Current Status |
|---|---|---|
| 💵 Expense ratio | Check the impact of cumulative costs over a long holding period | Low |
| 💧 Liquidity | Review daily trading value and bid-ask spreads | Top tier |
| 📊 Economic sensitivity | Check the trend in the economic cycle and manufacturing indicators | High sensitivity |
| 💱 Exchange rate | Check the impact on returns converted into Korean won | No currency hedge |
The industrial sector is sensitive to the economic cycle, so volatility can be larger than the broader market during economic slowdowns. Investors should also be aware that heavy weights in certain large stocks mean issues at individual companies can affect the whole fund.
This is a sector ETF suited to investors who want to concentrate on the U.S. industrial and manufacturing cycle. To focus more on aerospace and defense, ITA and XAR are options, while XLI is a sensible choice for broad exposure to industrials as a whole.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
This article reflects information as of June 21, 2026.
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