All industrial subsectors are notably overvalued relative to historical baselines. The iShares Global Industrials ETF offers diversified global industrials exposure, with stronger fundamentals and lower company-specific risk than XLI. However, EXI has underperformed XLI in both long-term and recent returns.
This article provides a top-down analysis of the industrial sector based on valuation, quality, and momentum. Industrials remain broadly overvalued, with transportation as the only undervalued subsector; aerospace/defense is the most overpriced. EXI offers global exposure and less concentration risk than XLI, but has underperformed, partly due to currency headwinds.