The Industrial sector has been one of the biggest disappointments for us so far in 2015. Typically it’s a sector that outperforms the market, and most other sectors during this time of the year. In fact historically since 1950 between the months of Oct. – April, it’s the third best performing sector. (see below).
This year things have been different, not enough to destroy our confidence in historical returns, but it has been different. Growth has been lagging in the industry as a result of global growth in key countries slowing and an energy sector that has been decimated.
The 2015 YTD performance of the industrials sector, as of yesterday was -.71%. As we always do, we worry about our clients money. Knowing that you can’t always get everything right all the time, the poor performance of the industrials sector has been on my mind.
Then the news came out this morning that GE was making some changes to it’s company (getting rid of GE Capital) as well as buying back $50 billion worth of stock. (You can learn more about it here). The market loved the news and GE is currently up 7.45%.
So how does this help industrials?
Below are the top 10 holdings of the industrials ETF XLI. GE makes up just shy of 10% of the ETF. The result has been a flip of the YTD returns for industrials. It is now positive for the year and is up a respectable .48% (still not enough but we’ll take it!).
Now let’s hope this gives industrials the boost it needs to finish the month strong!