If you're interested in broad exposure to the Industrials - Engineering and Construction segment of the equity market, look no further than the SPDR S&P Homebuilders ETF (
XHB Quick Quote XHB - Free Report) , a passively managed exchange traded fund launched on 01/31/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Engineering and Construction is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.70 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Engineering and Construction segment of the equity market. XHB seeks to match the performance of the S&P Homebuilders Select Industry Index before fees and expenses.
The S&P Homebuilders Select Industry Index represents the homebuilding sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the US common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Homebuilders Index is a modified equal weight index.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.66%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 58.50% of the portfolio, followed by Industrials.
Looking at individual holdings, Lowe's Companies Inc. (
LOW Quick Quote LOW - Free Report) accounts for about 4.21% of total assets, followed by Home Depot Inc. ( HD Quick Quote HD - Free Report) and Builders Firstsource Inc. ( BLDR Quick Quote BLDR - Free Report) .
The top 10 holdings account for about 39.27% of total assets under management.
Performance and Risk
So far this year, XHB has lost about -21.91%, and is up about 2.63% in the last one year (as of 03/09/2022). During this past 52-week period, the fund has traded between $65.57 and $86.27.
The ETF has a beta of 1.43 and standard deviation of 33.05% for the trailing three-year period, making it a high risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.
SPDR S&P Homebuilders ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XHB is an outstanding option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco Dynamic Building & Construction ETF (
PKB Quick Quote PKB - Free Report) tracks Dynamic Building & Construction Intellidex Index and the iShares U.S. Home Construction ETF ( ITB Quick Quote ITB - Free Report) tracks Dow Jones U.S. Select Home Construction Index. Invesco Dynamic Building & Construction ETF has $208.67 million in assets, iShares U.S. Home Construction ETF has $1.89 billion. PKB has an expense ratio of 0.60% and ITB charges 0.41%. Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit
Zacks ETF Center.