This ETF beat the S&P 500 for three straight years without touching AI — the returns reveal where policy and production really shifted

The First Trust RBA American Industrial Renaissance ETF (AIRR) returned 27.9% in 2025, outpacing the S&P 500’s 17.8% gain — the third consecutive year it has done so. This performance occurred without a single share of Nvidia or any of the “Magnificent Seven” tech giants. There are no semiconductors, no cloud platforms, no AI bets. Instead, AIRR’s returns are built on small- and mid-cap U.S. industrial firms and community banks, all tied to one underappreciated shift: the reshoring of American manufacturing.

AIRR tracks the American Industrial Renaissance Index, which selects companies from the Russell 2500 that derive at least 75% of their revenue domestically. Its holdings — like Argan, MasTec, Comfort Systems, and Sterling Infrastructure — are contractors, builders, and service providers embedded in domestic production networks. Community banks are included because they finance the working capital needs of small and mid-sized factories, acting as the financial “blood bank” of the sector.

The catalyst for outperformance began with pandemic-era supply chain breakdowns, escalated by geopolitical tensions and reinforced by Trump-era tariffs. Those policies made offshore production costlier and less reliable, prompting corporations to bring manufacturing back to the U.S. Unlike multinational giants, small and mid-sized industrial firms could pivot quickly when import costs rose, capturing new contracts and expanding capacity.

The macroeconomic signal has followed: after years of contraction, the Institute for Supply Management’s manufacturing PMI re-entered expansion territory in 2025, validating increased activity. Over the past three years, AIRR returned 38.9% annually — 31.4% in 2023, 33.5% in 2024, and 27.9% in 2025 — while the S&P 500 lagged in each period.

That edge now faces a headwind. A recent Supreme Court ruling struck down the bulk of the Trump-era tariff framework, removing a structural incentive for companies to reshore. While global supply chains are likely to remain fragmented, the diminishing force of policy-driven cost advantages may reduce the revenue tailwinds that powered AIRR’s run.