Much of 2018 was rosy for the industrials sector. Companies focused on industrial and commercial services and operations boomed as global manufacturing grew throughout the first portion of the year. Businesses with excess cash early in the year fueled a spending spree on equipment and other industrials products as well. However, by the end of the year, the negative pressures on the sector outweighed the positive ones. The looming prospect of a trade war between China and the U.S., four Fed interest rate increases, and a broader stock market decline heading into 2019 all dragged industrials stocks downward. The result was that this sector was one of the worst performers for the year overall.

Given the poor general performance of the industrials sector in 2018, it comes as no surprise that exchange-traded funds (ETFs) which focused on these stocks also suffered as well. Indeed, there was only one industrials-centered ETF which generated positive returns for 2018, and that fund only managed to do so by taking a strong bearish approach to the sector. Nonetheless, while all of the rest of the industrials ETFs currently available to investors posted losses, some of those funds suffered less than others. Below, we'll take a look at the top five performers in the industrials ETF space, although in many cases it may be better to think of these funds as those ETFs which had the most meager negative performance. We'll compare these funds' performance against that of the S&P 500 Industrials Select Sector Index, which saw average returns of -15.3%.

1. ProShares UltraShort Industrials ETF (SIJ)

Returns for 2018: +21.2%

2. VanEck Vectors Environmental Services ETF (EVX)

Returns for 2018: -4.2%

3. SPDR S&P Aerospace & Defense ETF (XAR)

Returns for 2018: -4.8%

4. Invesco Water Resources ETF (PHO)

Returns for 2018: -6.4%

5. iShares U.S. Aerospace & Defense ETF (ITA)

Returns for 2018: -7.4%

ProShares UltraShort Industrials ETF

The only ETF to offer inverse exposure to the industrials space is the ProShares UltraShort Industrials ETF (SIJ). SIJ not only provides inverse exposure, but it also provides leverage as well: it aims to generate a return that is -2x the return of its target benchmark, the Dow Jones Industrials Index. As such, the fund offers diverse exposure to companies in the aerospace, machinery, and general industrials areas. At an expense ratio of 0.95%, the fund is not cheap, and it also carries liquidity concerns owing in part to its tiny asset base of just under $4 million. This has turned many investors off to the fund, as it is typically intended to act as a single-day trading device. Because it compounds daily, the fund's returns are skewed over periods longer than a single day.

SIJ was launched in January of 2007. It gained 21.2% over the course of 2018.

VanEck Vectors Environmental Services ETF

After SIJ, the remaining funds on our list of top performers all posted losses overall for 2018. Among these, however, the VanEck Vectors Environmental Services fund generated the least-negative returns. EVX returned -4.2% for the year. This fund targets environmental services firms in the U.S., France and Canada. It specifically focuses on waste management companies, holding a portfolio of 30 such names that are divided into tiers by market cap. It tends to focus on smaller companies rather than larger ones, with more than 15% of its current portfolio in micro-cap stocks.

EVX was launched in October of 2006 and carries an expense ratio of 0.55%. It is a small fund, with under $21 million in its asset base as of this writing.

SPDR S&P Aerospace & Defense ETF

As the name suggests, the SPDR S&P Aerospace & Defense ETF (XAR) targets aerospace and defense companies in the U.S. One thing that sets this fund apart is its approach to weighting. It aims to balance large-, mid-, and small-cap stocks at 40%, 40% and 20%, respectively, whereas the benchmark tends to focus predominantly on large-cap names. This means that XAR doesn't track its benchmark perfectly and that it tends to carry a bit more risk than its market-cap-weighted competitors. XAR lost 4.8% across 2018, earning it the number three spot on our list of top performing industrials ETFs for the year.

XAR launched in September of 2011 and carries an expense ratio of 0.35%, making it one of the more affordable industrials ETFs. It has an asset base of approximately $1.1 billion.

Invesco Water Resources ETF

The Invesco Water Resources ETF (PHO) returned -6.4% for 2018, earning it the fourth spot on our list. The fund focuses on U.S. companies which create products related to the purification and conservation of water. It is one of the most popular water funds on the market and enjoys strong liquidity. The fund tends to focus on small companies and balances its index according to liquidity of its holdings.

PHO was launched in December of 2005 and carries an expense ratio of 0.62%. The fund currently has more than $727 million in assets under management.

iShares U.S. Aerospace & Defense ETF

Like the SPDR fund above, the iShares U.S. Aerospace & Defense ETF (ITA) focuses on U.S. makers, assemblers and distributors of equipment related to the defense and aerospace industries. However, while XAR adopts a unique weighting approach, ITA weights its index according to market cap. Still, it allocates less of its weight to the very largest firms as compared against most benchmarks. In 2018, ITA returned -7.4%.

ITA was launched in May of 2006 and carries an expense ratio of 0.43%. It is a sizable fund, with $4.33 billion in its asset base.