A pair of under-the-radar ETFs tracking made-in-America investment themes are quietly gathering assets, reflecting investor conviction that domestic manufacturing will thrive in the next presidential administration.
While other aspects of the election trade have been rethought amid shifting political winds, the $1.4 billion First Trust RBA American Industrial Renaissance ETF (ticker AIRR), a collection of small- and mid-cap industrial and community bank stocks, is on track to see 27 weeks of inflows, the longest such stretch in its 10-year history. Another fund, the $95 million Tema American Reshoring ETF (RSHO), a bet on the domestic supply chain, is also on track for nine consecutive weeks of inflows, boosting its assets by almost nine times this year.
“It’s an underappreciated trade,” said Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence. “Some of these names could be large beneficiaries of a Donald Trump presidency as there may be less reliance on China. They are domestically focused and have larger market caps.”
BlackRock Inc. this month launched the iShares US Manufacturing ETF (MADE), which tracks companies in manufacturing and related industries, noting the policy efforts implemented to accelerate domestic growth.
Consistent demand for the relatively unheralded securities stands in contrast to the rest of the supposed Trump trade, which at times has comprised of everything from industrials and energy stocks to cryptocurrency and other assets that could benefit from looser regulations. President Joe Biden’s withdrawal from the race and the emergence of Vice President Kamala Harris as the presumed Democratic candidate showed the perils of wagering on larger themes four months before the election.
While AIRR and RSHO are tiny in the context of the $9.5 trillion ETF universe in the US, the flows into each fund may also suggest some investors expect reshoring and industrial stocks to be winners regardless of who the next president is.
Decade old AIRR tracks an industrial gauge that holds firms such as Mueller Industries Inc., Primoris Services Corp. and MSC Industrial Direct Co Inc. RSHO, which invests in American reshoring companies, touts Applied Industrial Technologies Inc. and Eaton Corp. as its biggest holdings.
The flows come amid a broader re-assessment of the markets ahead of the November election. To Bloomberg Intelligence’s Gina Martin Adams and Nathaniel Welnhofer, the rotation into domestic-focused names reflects convictions on lower interest rates rather than a clean signal that Wall Street is positioning for a Trump presidency.
This article was provided by Bloomberg News.