State Street Industrial Select Sector SPDR ETF

XLI

Market cap $31.5B

Sector investing — it's a typical strategy for advisors if their clients are looking beyond broad market exposure by targeting a specific sector. The concept is fairly straightforward, but implementing the strategy is not as simple as it sounds.

Technology stocks have flatlined so far in 2026 due to artificial intelligence sector (AI) fatigue. Materials and industrial shares are rising on economic optimism and the AI infrastructure buildout.

FXR: Sophisticated Strategy With A High Fee Lagging XLI, A Hold

Japan's $36B U.S. investment targets energy, exports and minerals. ETFs like XLE could ride the industrial boost from this landmark pledge.

The industrial sector doesn't make headlines like tech stocks do, but it's the machinery behind infrastructure spending, defense budgets, and manufacturing cycles.

Launched on December 16, 1998, the State Street Industrial Select Sector SPDR ETF (XLI) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Broad segment of the equity market.

Dividend stocks and defensive sectors have dramatically outperformed as investors flee AI-vulnerable and AI-spending industries, but valuations now appear stretched. Consumer staples and energy sectors trade at historically high forward P/E multiples, often exceeding the S&P 500, despite lower long-term earnings growth prospects. Materials and industrials have also become extended, with valuations reflecting significant future earnings already priced in, especially given AI infrastructure spending.

Energy, basic materials, and defensive consumer stocks are in. Tech and financials are out.

Three of the smallest sectors in the S&P 500 delivered the index's strongest performance in January, while the two largest sectors weighed on returns. The broad market index gained modest ground last month, with the State Street SPDR S&P 500 ETF Trust (SPY) up 0.6%, according to ETF Database.

Matt Miskin, Manulife John Hancock Investments, joins 'The Exchange' to discuss the investment mistakes to avoid, which are set to benefit from policy this year and much more.