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Despite the common notion that industrials are fading in importance in the modern age of digital disruption, old school investments have outperformed the broader markets in recent years.
Indeed, as measured by either of the two biggest ETFs in the sector, Vanguard Industrials or Industrial Select SPDR, these investments have posted higher gains than the S&P 500 in the past one, three and five years. For those timeframes, the benchmark index posted annualized returns of 23%, 8.9% and 11.3%, respectively.

Many of the companies in the industrial sector are poised to have a strong 2017 as well, according to research from Fidelity. Two major factors likely to affect future performance are increased infrastructure spending in the U.S. and China, and increased U.S. defense spending, according to Fidelity.

President Trump’s plans to use tax incentives to spur $1 trillion in infrastructure spending over 10 years would help the transportation and construction industries. And his pledge to boost Pentagon spending would benefit aerospace and defense contractors. Overall, the industrial sector covers three major types of businesses: manufacturing and distributing capital goods, providing commercial services and supplies, and providing transportation services. Capital goods is the largest group – almost 75% – and, within that category, aerospace and defense is the biggest industry.

Fidelity accounted for seven of the top 20 industrial funds over the past 12 months. State Street and BlackRock also fared well. Click through to see the top 20 funds. All data from Morningstar.