Funds for US Manufacturing Revival

A key strategy for investors looking to increase the return on their capital is to take advantage of business trends. One important trend taking place in the business world is called reshoring. This term refers to manufacturing firms that are moving their operations from overseas back to the United States. Here is a closer look at this intriguing development in the manufacturing industry.

Companies have various reasons for returning all or part of their operations to the United States. The cost of shipping goods from a foreign country to the United States is one important reason, as is the increasing labor costs in many areas of the world, such as China. Manufacturing firms are always looking for ways to increase their profits and bringing their plants and factories back home is a good way save money.

You have several investment options available to benefit financially from the reshoring phenomenon. Purchasing the bonds of manufacturing firms is one possibility. Bonds typically bring considerably lower returns than stocks, however, so ambitious investors should focus on stocks.

Of course, there are different ways to invest in the shares of manufacturing firms. Purchasing stocks of individual companies is the most obvious method, but this method is also rather risky. It’s almost impossible to determine the future course of a single business, as a company might decline unexpectedly due to poor management and lose most or all of its value.

A sound alternative is to invest in stock funds. These financial vehicles invest your capital in a variety of firms to spread the risk out among many companies. The two main types of stock funds are mutual funds and exchange-traded funds, or ETFs. They have some similarities but also a couple of important differences. For example, a mutual fund trades only after the market closes for the day, while an ETF trades during the day like an individual stock. An ETF is often more advantageous for tax purposes as well.

Regardless of which type you choose, make certain that the fund focuses solely on manufacturing firms. Such funds are known as industrial funds. Select a fund with low management fees, as high fees eat into your profits over the long term.

Another key decision to make about industrial funds involves finding out the percentage of shares in each firm. Some funds have a larger percentage of shares in the most prominent manufacturers and a lower percentage of shares in smaller companies. Other funds distribute their investment equally throughout all of the companies in the fund.

Purchasing a stock fund is an efficient way to benefit from reshoring. Financial vehicles, such a mutual funds and ETFs, strike a delicate balance between the lower return of bonds and the higher risks associated with buying individual stocks.

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