This Overlooked ETF Has Beaten the S&P 500 for 3 Straight Years

The First Trust RBA American Industrial Renaissance ETF (AIRR) has delivered exceptional returns, averaging 38.9% annually over 3 years and 21.7% over 10 years, versus 2023-2025 annual gains of 31.4%, 33.5%, and 27.9%. The article frames the ETF as a reshoring play tied to U.S. manufacturing, tariffs, and supply-chain reconfiguration, with current holdings concentrated in industrials (92%) and a 7% stake in community banks. The piece is largely commentary rather than a new catalyst, so near-term market impact is limited.

Analysis

The market is implicitly rewarding domestic capacity that can turn policy friction into pricing power, but the more interesting edge is not “industrial rebound” so much as balance-sheet resilience inside the reshoring basket. The winners are the contractors and specialty infra names with short-cycle backlog conversion and limited import exposure; they can reprice labor and materials faster than original equipment manufacturers, so incremental demand drops disproportionately to EBITDA. That makes names like STRL, EME, and MTZ more attractive than broader industrial proxies, because their earnings leverage is tied to execution, not just macro capex headlines.

The second-order effect is that reshoring is self-reinforcing only while end-demand stays firm. If PMI improvement is coming from inventory rebuilds rather than true final demand, this can fade into a 1-2 quarter air pocket once backlogs normalize. The other risk is policy slippage: if tariff support is reduced or courts further dilute the economic case, the valuation premium on domestic contractors can compress quickly because the market is already paying for a multi-year theme.

Contrarianly, the consensus seems to underappreciate how narrow the opportunity set is. AIRR’s structure means a lot of the upside is concentrated in a few names with strong operational execution, while the ETF’s fee drag and small-cap liquidity make it a blunt instrument for expressing the theme. The better trade is to own the highest-quality domestic industrial compounders and avoid lower-quality beneficiaries that are simply levered to the narrative.

Near term, this is more of a months-long relative-value setup than a days-long catalyst trade: the next leg depends on continued order growth, not headline policy. If rates stay elevated, smaller domestic builders and specialty contractors could still outperform because their pricing power and backlog visibility offset financing costs better than asset-heavy manufacturers. But if macro data softens, the trade likely rotates from cyclicals into defensives before the reshoring premium fully unwinds.

Key Decisions for Investors

• Long STRL / EME / MTZ basket versus VOO for 3-6 months: these names should capture the highest incremental margin from domestic infrastructure and industrial spend, with better earnings momentum than passive market beta.
• Avoid using AIRR as the main exposure; if you need the theme, prefer individual names. The ETF’s concentration and fee load make it vulnerable to underperform if just 2-3 holdings miss backlog conversion or guidance.
• Pair trade: long EME, short a broad industrial ETF or industrial cyclical proxy for 1-2 quarters. The thesis is that execution-heavy contractors can sustain premium multiples while generic industrials face slower pass-through and more commodity/labor pressure.
• Buy short-dated call spreads on STRL or MTZ only on pullbacks after weak macro prints. The risk/reward is best when the market prices in a slowdown but backlog visibility remains intact.
• Set a stop on domestic-industrial longs if PMIs roll over for two consecutive months. That would signal the reshoring trade is being driven by inventory restocking rather than durable capex, which would cap upside quickly.