In the world of thematic investing, big-picture ideas often grab the headlines. But as I discussed recently on CNBC, some of the most compelling opportunities are still “under the radar”—themes that are showing strong signs of investor attention but haven’t seen the explosive flows… yet.
One of these areas is Industrial Reshoring.
In this post, we’ll break down this specific sub-category, look at the ETFs offering exposure, and use our platform tools to see what’s really “under the hood.”
Sizing the Opportunity: From Thematic to Infrastructure
To understand where reshoring fits, we first have to zoom out. The Thematic Equity space is a significant market, currently holding over $273 billion in AUM.
Within this universe, the Infrastructure category is the fourth-largest, with just under $40 billion in AUM. But “infrastructure” is a broad term. At ETF Action, our goal is to help you navigate this complexity. We break the infrastructure category into five distinct subgroups to provide clarity.
Thematic Dashboard – track all 396 ETFs ETF Action classifies as thematic, expanding 12 broad-based categories and over 100 sub-categories.
Spotlight on Industrial Reshoring
Today, we’re diving deep into one of those five subgroups: Industrial Reshoring.
While we read about redefining supply chains and bringing manufacturing back to the U.S. all the time, how can you actually invest in this theme via an ETF?
This specific sub-category currently features 5 ETFs. Despite its niche focus, it’s punching above its weight:
- Year-to-Date Performance: Up nearly 21%
- Year-to-Date Flows: Over $2.2 billion in new assets
That level of inflow for such a small category is significant and shows growing conviction. The space includes the category’s veteran, the First Trust RBA American Industrial Renaissance ETF (AIRR) with $6.1B in AUM, as well as newer, interesting entrants like the Tema American Reshoring ETF (RSHO).
Under the Hood: Not All Reshoring ETFs Are Built Alike
This is where analysis is critical. A quick comparison of these 5 ETFs reveals major differences in strategy and portfolio construction.
When we look at sector breakdowns, the divergence is clear:
- The First Trust ETF (AIRR) is almost entirely allocated to the Industrials sector (over 90%).
- The Tema American Reshoring ETF (RSHO) has a large, but smaller, allocation to Industrials (around 74%).
- Other funds in the space have significant allocations to Energy and Materials, which are absent in competitors.
Case Study: A Look at the Newest Entrant
Let’s use the Portfolio Visualizer tool to analyze the newest fund in the space, the GMO Domestic Resilience ETF (DRES), which just launched in October.
A look “under the hood” of DRES shows a distinct thesis:
- Industrials: ~72%
- Materials: ~17%
- Energy: ~10%
At the industry level, this translates into exposure to companies in Ground Transportation, Construction Materials, and Aerospace & Defense—all tied to the concept of supporting a robust, domestic supply chain.
The Macro Thesis and Analyst Outlook
So, what’s the big-picture takeaway? Investing in industrial reshoring is a play on the macro-development of redefining supply chains and prioritizing critical services and materials within our own borders.
This isn’t just a political narrative; it’s a realistic shift in global logistics, and these ETFs are designed to capture the companies that stand to benefit.
From an analyst perspective, the theme shows promise. Using our Analyst Consensus tool, the average upside potential for the underlying holdings in this category (based on 12-18 month price targets) is currently around 15%.
Want to Go Deeper?
This insight just scratches the surface of what’s available on the ETF Action platform. For our premium subscribers, we provide in-depth monthly Category Reports and Data Packs that offer competitive analytics, ratings, and rankings for every single ETF in a category.
This is an interesting theme to watch as it continues to play out. If you have any questions, don’t hesitate to reach out to our team.
Disclosures
This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.
This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.
