Don't Buy SPY Until You Look at These 2 ETFs First

"Wall Street is coalescing into specific sectors more, and this is a long-term trend you can take advantage of. You can pick ETFs that will benefit from megatrends the most over the coming years to boost your gains. This doesn't mean you must pick out a narrow AI-focused ETF with a dozen or so holdings. Thousands of ETFs are in the market today, and hundreds have outperformed the SPY for years while having solid diversification."

"XLI has trailed the S&P 500 historically, but the coming years will be pivotal for this ETF. The last two decades saw the U.S. being stripped of a major portion of its manufacturing capacity, with many industries moving offshore. China dominates manufacturing today, but the pendulum may swing the other way. Re-industrialization and onshoring were expedited during the Biden era, and could be supercharged further by tariffs in the Trump era. This is already having an impact on XLI's gains."

"XLI has outperformed the SPY this year, up 16.75% year-to-date, against the SPY's 14.8% gain. I see it outperforming the SPY in the coming years due to tariffs bringing more manufacturing and industry to the U.S. And even if that does not happen as expected, XLI can still match or slightly lag the SPY. XLI comes with a 1.37% dividend yield and a 0.08% expense ratio, or $8 per $10,000. SPY gets you a 1.08% yield and charges you $1 more per $10,000."

Many investors concentrate holdings in a single broad-market ETF and may miss larger sector-driven gains. Wall Street is shifting toward specific sectors, creating opportunities to select ETFs aligned with long-term megatrends. Thousands of ETFs exist, and hundreds have outperformed SPY while maintaining solid diversification from reputable issuers. The Industrial Select Sector SPDR Fund (XLI) tracks the Industrial Select Sector Index and provides exposure across industrial subsectors. Re-industrialization and onshoring could lift XLI after decades of offshoring. XLI has recently outperformed SPY year-to-date and offers a 1.37% dividend yield with a 0.08% expense ratio.

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