What Is XLI? Industrial Select Sector SPDR Fund

XLI is the Industrial Select Sector SPDR Fund, a passively-managed fund that holds the industrials slice of the S&P 500 in a single ticker. It tracks the Industrial Select Sector Index, which carves the roughly 75 industrial companies out of the S&P 500 and weights them by market cap. In one position you get aerospace and defense, machinery, railroads and airlines, building products, logistics and delivery, and the large diversified conglomerates, all bundled together.

The appeal is breadth within a single sector. Rather than betting on one industry (just defense, or just railroads), XLI spreads across the full industrial economy, so no single sub-sector dominates the way it would in a narrower fund. At a 0.09% expense ratio it is one of the cheapest ways to express a broad industrials view, and it has been the standard passive vehicle for that exposure since December 1998.

Approximate weights as of early 2026; refresh quarterly from State Street SPDR's fund page. Each ticker links to its individual stock guide in Walnut.

XLI is market-cap weighted, so the largest industrials sit at the top, but no single name overwhelms the fund: the leaders land in the 2.5% to 5% range rather than the double-digit weights you see in a concentrated tech index. As of early 2026 the top names span GE Aerospace, Caterpillar, RTX, Honeywell, Union Pacific, Eaton, Deere and Company, Lockheed Martin, Boeing, and Automatic Data Processing. See the top-10 table above for current weights.

What that list shows is how many different businesses the word industrials actually covers. There is aerospace and defense (GE Aerospace, RTX, Lockheed Martin, Boeing), heavy machinery and farm equipment (Caterpillar, Deere), electrical and power equipment (Eaton, Honeywell), and transportation (Union Pacific in rail). The mix is the point: a slowdown in one sub-sector can be offset by strength in another, which softens the swings any single industry would create.

Both XLI and VIS give you US industrials in one ticker, and at the headline level they look similar: comparable low expense ratios and heavy overlap in the largest names. The difference is the universe each one draws from. XLI (SPDR) holds only the industrials inside the S&P 500, roughly 75 large-cap names. VIS (Vanguard) reaches across a broader index of about 390 stocks, including mid-cap and small-cap industrials that XLI leaves out entirely.

In short: XLI is the large-cap, S&P 500-only expression, while VIS adds the smaller end of the industrial market. If you want exposure concentrated in the established blue-chip industrials, XLI is the tighter fit; if you want the long tail of smaller manufacturers and suppliers included, VIS casts the wider net. Returns over multi-year windows have tended to track closely, since the largest companies drive most of the performance in both.

XLI is economically cyclical, and understanding that is the key to reading its performance. Industrial companies sell into capital expenditure budgets, factory output, freight volumes, and construction activity, so the fund tends to do well when the economy is expanding and businesses are investing, and to lag when growth slows and capex budgets tighten. It is one of the more sensitive sectors to the broader economic cycle, which means it can move faster than the market in both directions.

Because of that sensitivity, XLI is best judged over a full cycle rather than a single quarter or year. Recent multi-year tailwinds (defense spending, infrastructure investment, and supply-chain reshoring) have supported industrial earnings, but those are themes that ebb and flow with policy and the macro backdrop. A buyer should expect periods where XLI leads the market and periods where it noticeably trails, in line with where the economy sits in its cycle.

XLI is best understood as a sector tilt or satellite, not a core holding. A common structure is a broad market-cap core (something like VOO or VTI) for diversified growth, with XLI layered on when an investor has specific conviction in the industrial economy and wants to overweight it. Because it covers only one sector, it leaves out technology, healthcare, financials, and everything else, so it is not meant to stand on its own as a complete portfolio.

Two things to weigh before buying: XLI is cyclical, so it can swing harder than a broad index across the economic cycle, and it overlaps with any broad index you already own (the S&P 500 already contains these same industrials at a smaller weight), meaning XLI concentrates rather than diversifies. Walnut isn't an investment adviser and this isn't a recommendation, but in conversation Walnut's AI can show you how much XLI overlaps with what you already hold and where a sector tilt would land in your overall mix.

XLI trades on NYSE Arca during US market hours (9:30am to 4:00pm ET) and is available commission-free at every major broker, including Robinhood, Fidelity, Schwab, Vanguard, Public, M1, and Webull. Fractional shares are supported at most modern brokers, which makes it straightforward to size a sector tilt to an exact dollar amount rather than a whole number of shares, and to reinvest the quarterly dividends automatically (DRIP).

Walnut doesn't replace your broker, it sits on top of it. Connect any major broker and Walnut adds an AI layer that helps you build a basket around XLI, track how your industrials sleeve is doing against your targets, and rebalance when your allocation drifts.

ETFs are passive bundles; thematic baskets in Walnut let you concentrate within them. If you hold XLI as a core position, these are the themes you might layer on as satellites.

There are three common ways to get XLI exposure. Buy shares (or fractional shares) of XLI directly at any major broker that lists it. Hold it as a core position and layer more concentrated ideas on top. Or build it into a thematic basket in Walnut, so XLI sits alongside other holdings that express the same thesis, with target weights you can rebalance toward. XLI trades like a stock during market hours, so you buy it the same way you would any listed share.

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Whether XLI is a good buy depends less on any single call and more on your time horizon and what you already hold: it tracks Industrial Select Sector, so the real question is whether you want that exposure in your mix and at what weight. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is XLI a buy?

XLI is a broad, relatively even-weighted bet on the whole industrial economy rather than one sub-sector, which softens single-industry swings. It fits as a cyclical sector tilt around a diversified core, where PAVE concentrates more tightly on infrastructure-development names and VIS casts a wider all-cap net.

Whether XLI is worth buying today depends more on your time horizon and what you already hold than on any single call. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is XLI a buy?

XLI yields ~1.4% as of early 2026, paid by passing through the dividends of its underlying holdings. For the payout schedule, history, and how the distributions are taxed, see XLI dividend: yield and schedule.

New to funds like XLI? Start with what an ETF is, then how to buy an ETF, or browse the full guide to ETF investing.