A pair of under-the-radar ETFs tracking the made-in-America investment theme are quietly gathering assets, reflecting investor confidence that domestic manufacturing will thrive under the next presidential administration.
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Published July 30, 2024 • 2 minutes of reading
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(Bloomberg) — A pair of under-the-radar ETFs tracking the made-in-America investment theme are quietly gathering assets, reflecting investor confidence that domestic manufacturing will thrive under the next presidential administration.
While other aspects of the election trade have been reconsidered amid shifting political winds, the $1.4 billion First Trust RBA American Industrial Renaissance ETF (ticker AIRR), a collection of small and medium-sized industrial stocks and community bank stocks, is on track to see 27 weeks of inflows, the longest in 10-year history. Another fund, $ 95 million Theme American Reshoring ETF (RSHO), betting on the domestic supply chain, is also on track for nine consecutive weeks of inflows, boosting its assets almost nine times a year.
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“It’s an underappreciated trade,” said Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence. “Some of these names could be big beneficiaries of Donald Trump’s presidency because they could be less dependent on China. They are focused domestically and have a bigger market cap.
BlackRock Inc. this month launched the iShares US Manufacturing ETF (MADE), which tracks companies in Manufacturing and related industries, noting policy efforts implemented to accelerate domestic growth.
consistent demand for relatively unheralded securities stands in contrast to the rest of Trump’s supposed trade, which at times has consisted of everything from industrial and energy stocks to cryptocurrency and other assets that can benefit from looser regulations. President Joe Biden’s withdrawal from the race and the emergence of Vice President Kamala Harris as the presumptive Democratic nominee show the dangers of betting on a larger theme four months before the election.
While AIRR and RSHO are small in the context of the $9.5 trillion ETF universe in the U.S., the flows into each fund may also suggest some investors expect reshoring stocks and industrials to be winners, regardless of who the next president is.
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The decade-old AIRR tracks the size of the industry holding companies such as Mueller Industries Inc., Primoris Services Corp. and MSC Industrial Direct Co. Inc. RSHO, which invests in American reshoring companies, considers Applied Industrial Technologies Inc. and Eaton Corp. ownership.
The flow comes amid a broader market reassessment ahead of the November election. For Bloomberg Intelligence’s Gina Martin Adams and Nathaniel Welnhofer, the rotation into domestically focused names reflects confidence in lower interest rates rather than a clean signal that Wall Street is positioned for a Trump presidency.
—With the help of Vildana Hajric.
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