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

If you're interested in broad exposure to the Industrials - Broad segment of the equity market, look no further than the iShares U.S. Industrials ETF (IYJ), a passively managed exchange traded fund launched on 06/12/2000.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.44 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.03%.

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 62.40% of the portfolio. Financials and Materials round out the top three.

Looking at individual holdings, Visa Inc Class A (V) accounts for about 8.31% of total assets, followed by Mastercard Inc Class A (MA) and Accenture Plc Class A (ACN).

The top 10 holdings account for about 35.25% of total assets under management.

Performance and Risk

So far this year, IYJ has lost about -12.20%, and is down about -4.04% in the last one year (as of 04/07/2025). During this past 52-week period, the fund has traded between $116.96 and $143.93.

The ETF has a beta of 1.08 and standard deviation of 18.22% for the trailing three-year period, making it a medium risk choice in the space. With about 195 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Industrials ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IYJ is a sufficient option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

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 $4.76 billion in assets, Industrial Select Sector SPDR ETF has $18.03 billion. VIS has an expense ratio of 0.09% and XLI charges 0.08%.

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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This article originally published on Zacks Investment Research (zacks.com).

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