🤝 BFF Take
VIS Has More Coverage — XLI Is the Default for Tactical Traders
XLI (Industrial Select Sector SPDR) and VIS (Vanguard Industrials ETF) are both cheap US industrials ETFs with overlapping top holdings. XLI holds 78 S&P 500 industrials — GE Aerospace, Caterpillar, RTX (Raytheon), Honeywell, and Union Pacific are typical top positions. VIS holds 345+ industrials including mid-cap manufacturers, transportation companies, and defense contractors not in the S&P 500. Both charge essentially nothing: XLI 0.09%, VIS 0.10%. Industrials are a cyclical sector closely tied to economic growth — they outperform in expansions and lag in contractions. XLI's large AUM ($18B) and high trading volume make it the preferred institutional vehicle. VIS's broader index gives more mid-cap exposure. For long-term sector investing, either works — VIS has a slight breadth advantage.
📋 Quick Takeaways
🏭XLI holds 78 S&P 500 industrials; VIS holds 345+ — more mid-cap manufacturing and defense exposure in VIS
💰XLI 0.09% vs VIS 0.10% — effectively identical fee; cyclical sector ETFs ideal as portfolio complements
📈Industrials are cyclical — they outperform in economic expansions but fall harder in recessions than defensive sectors
📊 Data-Based Take: VIS has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
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Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
XLI
Industrial Select Sector SPDR Fund
VIS
Vanguard Industrials ETF
📋 XLI vs VIS — Key Facts Side by Side
| Metric |
XLI |
VIS |
| Fund Name |
Industrial Select Sector SPDR Fund |
Vanguard Industrials ETF |
| Issuer |
State Street |
Vanguard |
| Tracks Index |
Industrial Select Sector Index |
MSCI US IMI Industrials 25/50 |
| Expense Ratio |
0.09% ✓ |
0.10% |
| Cost per $10K/yr |
$9.00 |
$10.00 |
| AUM |
$18B |
$5B |
| Holdings |
78 |
345 |
| Inception |
1998 |
2004 |
| 1-Year Return |
+12.40% |
+13.60% |
| 3-Year Return |
+11.80% |
+12.40% |
| 5-Year Return |
+16.20% |
+17.00% |
| Avg Bid-Ask Spread |
0.01% |
0.01% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 XLI vs VIS — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy XLI or VIS?
Choose if...
XLI
- You want the lowest fees — saves ~$1/yr per $10K vs VIS
- You already use State Street and prefer staying within their fund family
Choose if...
VIS
- You want broader diversification (345 holdings vs 78)
- You already use Vanguard and prefer staying within their fund family
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❓ XLI vs VIS — Frequently Asked Questions
What companies are in XLI and VIS?
Both funds hold similar mega-cap industrials: GE Aerospace (jet engines/aircraft), RTX/Raytheon (defense/aerospace), Caterpillar (construction equipment), Honeywell (industrial technology), Union Pacific (railroads), Deere (agricultural equipment), and Lockheed Martin (defense). VIS adds mid-cap industrials, transportation companies, and defense contractors that don't qualify for the S&P 500 selection criteria.
Is industrials a good sector to invest in?
US industrials benefit from several long-term tailwinds: infrastructure investment (infrastructure bill spending), defense budget growth (NATO spending), reshoring of manufacturing (semiconductor fabs, clean energy), and AI-driven factory automation. The sector is cyclical — it underperforms in recessions — but long-term secular trends support industrial capex. Both XLI and VIS provide diversified exposure to US manufacturing and industrial growth.
Does the defense industry affect XLI?
Significantly — defense contractors (RTX/Raytheon, Lockheed Martin, Northrop Grumman, L3Harris) are major holdings in both XLI and VIS. With elevated global defense spending post-Ukraine war and NATO members increasing military budgets, defense companies have been strong performers. Defense gives industrials ETFs a somewhat defensive quality despite the sector's cyclical classification.
How does reshoring affect industrial ETFs?
The CHIPS Act (domestic semiconductor manufacturing), IRA (clean energy manufacturing), and bipartisan infrastructure bills have driven significant US industrial investment. Companies building new US facilities benefit — construction companies, equipment suppliers, industrial automation firms. This structural tailwind differentiates US industrials from some other markets and adds a policy-driven growth layer beyond the normal economic cycle.
What is the best way to add industrials to a portfolio?
For most investors, XLI or VIS provides appropriate industrials sector exposure as a cyclical complement to defensive positions. A common approach is a "barbell" strategy — pairing growth/tech ETFs (QQQ, SCHG) with defensive (XLP, XLU) and cyclical (XLI, XLF) sectors for diversification. Industrial ETFs are typically 5-15% of a diversified equity portfolio for investors who want sector tilts beyond a total market fund.
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ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.