Key insights
- The First Trust RBA American Industrial Renaissance ETF (AIRR), focused on reshoring and domestic manufacturing, has outperformed the S&P 500 for three years. Positive US manufacturing PMI readings in 2025-2026 support the fund's focus on small- and mid-cap industrial stocks benefiting from the trend of companies bringing operations back to the US. This suggests a potential shift in market leadership beyond the tech sector.
If you were asked what type of exchange-traded funds (ETFs) have beaten the S&P 500 over each of the past three years, you'd probably say one focused on AI stocks or semiconductors. While some of those funds would certainly qualify, there's one ETF that's pulled off the feat that doesn't play in that sandbox at all.
No tech. No semiconductors. No "Magnificent Seven." It invests almost exclusively in small- and mid-cap industrial stocks. And it's one of the best-performing ETFs in the entire marketplace over the past five years.
The First Trust RBA American Industrial Renaissance ETF (AIRR +0.78%) focuses on a theme that's gotten big this decade -- reshoring. It's the idea that American companies will continue to bring their operations back to the United States in order to capture advantages in cost, quality, and timing.
This theme really got a lot of attention during the COVID-19 pandemic. As demand for goods rose and supply chains became strained, there was a strong push to bring manufacturing back home to reduce reliance on global trade partners.
Tariff policies under the second Trump administration significantly raised the cost of goods for U.S. importers. The intention there was to again bring manufacturing back to the United States.
Those efforts have increased some domestic manufacturing activity. U.S. manufacturing PMI readings, which largely showed contracting activity in 2023 and 2024, are showing steady expansion again in 2025 and the early part of 2026.
This ETF tracks the Richard Bernstein Advisors American Industrial Renaissance Index. Beginning with the Russell 2500 index, which includes mid- and small-cap companies, it focuses only on infrastructure, manufacturing, transportation, and related service companies.
Companies must derive at least 75% of their revenue from U.S. companies, have a positive 12-month forward earnings estimate, and meet certain size and liquidity requirements. RBA then uses a proprietary portfolio optimization method to weight each individual qualifying component.
The fund consists mostly of industrial companies with a 7% allocation to community banks. Current top holdings include Argan, MasTec, Comfort Systems, Sterling Infrastructure, and EMCOR Group.
The focus on smaller companies makes sense. These are the companies that traditionally rely more heavily on cheap foreign manufacturers for inputs. They also have greater flexibility in moving their supply chains than large multinationals do.
A breakdown of how the First Trust RBA American Industrial Renaissance ETF looks compared to the Vanguard S&P 500 ETF (VOO +1.21%) shows the following: