Designed to provide broad exposure to the Industrials - Engineering and Construction segment of the equity market, the SPDR S&P Homebuilders ETF (
XHB Quick Quote XHB - Free Report) is a passively managed exchange traded fund launched on 01/31/2006.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient 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 11, placing it in bottom 31%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $896.19 million, making it one of the average sized 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.88%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 53% of the portfolio, followed by Industrials.
Looking at individual holdings, Floor & Decor Holdings Inc. Class A (
FND Quick Quote FND - Free Report) accounts for about 3.89% of total assets, followed by Trane Technologies Plc ( TT Quick Quote TT - Free Report) and Lennox International Inc. ( LII Quick Quote LII - Free Report) .
The top 10 holdings account for about 38.11% of total assets under management.
Performance and Risk
The ETF has lost about -29.54% and is down about -22.30% so far this year and in the past one year (as of 09/14/2022), respectively. XHB has traded between $52.03 and $86.27 during this last 52-week period.
The ETF has a beta of 1.37 and standard deviation of 35.47% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XHB is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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 $114.10 million in assets, iShares U.S. Home Construction ETF has $1.21 billion. PKB has an expense ratio of 0.60% and ITB charges 0.39%. Bottom Line
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Zacks ETF Center.