Industrial Select Sector SPDR Fund (XLI) Top 25 Holdings

The Industrial Select Sector SPDR Fund (XLI) is one of the most popular ways to gain targeted exposure to U.S. industrial companies. With over two decades of history, XLI has become the go-to choice for investors seeking access to aerospace, defense, transportation, machinery, and services in a single, liquid ETF. Its goal is simple: track the performance of the industrial sector as represented in the S&P 500.

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Investors often turn to XLI as a sector allocation tool or as a tactical way to play economic cycles. Industrial stocks tend to move with business activity, infrastructure spending, and defense budgets, so they’re often in focus when growth or policy stimulus is at stake. With low costs and strong liquidity, XLI makes it easy to capture these trends without having to pick individual stocks.

Looking under the hood, though, shows how concentrated leadership really is. The top holdings, including companies such as GE Aerospace, Caterpillar, and RTX Corporation, represent a significant portion of the industrial economy. Let’s explore the top positions to understand where the weight lies and why the top three matter so much for XLI’s performance.

1. GE Aerospace (GE)

GE Aerospace has become the star of General Electric’s transformation, standing on its own as a dedicated aerospace business after the company’s restructuring. Its engines power a majority of the world’s commercial aircraft, while its defense contracts extend into military jets and helicopters. That global scale creates a moat few can match, and the aftermarket services business ensures recurring revenue long after an engine is sold.

The company has been a major beneficiary of the rebound in air travel, with demand for narrow-body aircraft driving higher production rates and greater parts consumption. At the same time, long-term service agreements make its cash flows more resilient, even during industry downturns. This blend of cyclical growth and recurring revenue provides both upside and stability, an unusual mix in the industrial world.

For XLI investors, GE Aerospace is more than just another holding. With nearly 7% of the fund’s weight, its quarterly results can ripple across the ETF’s performance. Its ability to expand margins, win new defense contracts, and capture growth from global aviation puts it in a unique position to drive XLI forward in both bull and bear markets.

2. Caterpillar Inc (CAT)

Caterpillar is the face of global construction and mining equipment, a company whose fortunes often track with economic cycles. Infrastructure projects, resource extraction, and construction activity are the main growth drivers, and Caterpillar’s global distribution network ensures it can deliver its iconic yellow machines anywhere they’re needed. Its scale makes it the go-to supplier for governments and corporations alike when major projects are underway.

What separates Caterpillar is the strength of its services and parts business. Maintenance contracts and aftermarket parts generate reliable, high-margin revenue that cushions the cyclical nature of machinery sales. As governments ramp up infrastructure spending, particularly in the U.S. with bipartisan funding initiatives, Caterpillar is well-positioned to capture multi-year demand. At the same time, its mining equipment benefits from rising demand for metals tied to electrification, such as copper and lithium.

For XLI, Caterpillar acts as a direct line to global infrastructure and resource development trends. Its weight in the ETF means that when construction spending booms, Caterpillar pulls the fund higher. Investors view Caterpillar not just as a cyclical play, but as a company with a strong balance sheet, robust cash generation, and a dividend history that offers both growth and income.

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3. RTX Corporation (RTX)

RTX Corporation, created by the merger of Raytheon and United Technologies, is one of the most diversified aerospace and defense companies in the world. Its portfolio stretches from Pratt & Whitney jet engines to Collins Aerospace systems and Raytheon’s advanced defense technologies. That balance gives it exposure to both commercial aviation and steady defense spending, a dual engine of growth that makes RTX a core industrial name.

The company has faced challenges, particularly with Pratt & Whitney’s geared turbofan engines, which required extensive inspections and repairs. However, even with those setbacks, RTX’s scale and defense backlog maintain high revenue visibility. Defense contracts, particularly from the U.S. government and NATO allies, provide stability that investors prize, especially during periods of economic uncertainty. Meanwhile, the recovery in global air travel continues to drive demand for Collins Aerospace’s commercial systems.

For XLI, RTX is a key anchor. Its nearly 5% weight reflects both its size and its importance to the broader industrial economy. When defense budgets grow or air travel accelerates, RTX acts as a positive catalyst for the ETF. And while engine recalls have created near-term headwinds, the company’s diversified revenue streams mean it remains one of the ETF’s most dependable contributors over the long term.

Key Insights Around XLI

XLI may own dozens of industrial companies, but leadership is concentrated at the top. GE Aerospace, Caterpillar, and RTX collectively make up more than 16% of the fund, a weight that significantly influences the ETF’s returns in both good and bad times. Add in other heavyweights like Boeing, Honeywell, and Union Pacific, and you can see how much of the fund’s performance depends on just a handful of names.

For investors, this concentration isn’t necessarily a drawback. These companies are industry leaders with durable competitive advantages, global footprints, and exposure to multi-year growth themes. But it does mean that XLI isn’t a pure equal-weighted play on the industrial economy; it’s tilted toward the largest players in aerospace, defense, and heavy machinery.

Key Insights

• Aerospace and defense heavy: Nearly 20% of the fund is tied to companies in these subsectors, making XLI highly sensitive to both government spending and trends in air travel.
• Infrastructure lever: Holdings like Caterpillar, Deere, and Eaton tie the ETF directly to infrastructure and energy transition spending, themes that are likely to persist for years.
• Concentration risk: The top 10 names account for roughly 40% of assets. Investors get exposure to leaders but less diversification than they might expect.

Why XLI Is Right For Industrial Sector Investment

XLI remains one of the most effective ways to capture the performance of the U.S. industrial sector. Its low cost and liquidity make it a favorite for both tactical traders and long-term allocators, while its holdings reflect the dominant forces shaping global industry today. Aerospace and defense firms, construction equipment makers, and logistics companies all come together in one package.

For investors seeking diversification, it’s worth remembering that XLI’s fate is tied closely to a few large companies. GE Aerospace, Caterpillar, and RTX provide both opportunity and risk: when they thrive, XLI outperforms; when they stumble, the fund feels it. That’s the trade-off of owning a sector ETF built on market-cap weighting.

Still, for portfolios looking to balance growth, income, and exposure to cyclical industries, XLI offers a straightforward solution. It’s a fund built to reflect the backbone of the U.S. economy, companies that keep planes flying, infrastructure moving, and supply chains humming.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!