Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the Materials Select Sector SPDR ETF (
XLB Quick Quote XLB - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $5.49 billion, making it one of the largest ETFs attempting to match the performance of the Materials - Broad segment of the equity market. XLB seeks to match the performance of the Materials Select Sector Index before fees and expenses.
The Materials Select Sector Index seeks to provide an effective representation of the materials sector of the S&P 500 Index.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.52%.
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 Materials sector--about 100% of the portfolio.
Looking at individual holdings, Linde Plc (
LIN Quick Quote LIN - Free Report) accounts for about 20.36% of total assets, followed by Sherwin Williams Co/the ( SHW Quick Quote SHW - Free Report) and Air Products + Chemicals Inc ( APD Quick Quote APD - Free Report) .
The top 10 holdings account for about 65.57% of total assets under management.
Performance and Risk
The ETF return is roughly 5.69% and it's up approximately 13.88% so far this year and in the past one year (as of 09/19/2023), respectively. XLB has traded between $67.32 and $85.72 during this last 52-week period.
The ETF has a beta of 1.08 and standard deviation of 20.65% for the trailing three-year period, making it a medium risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Materials Select Sector SPDR 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, XLB is a sufficient option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
SPDR S&P Global Natural Resources ETF (
GNR Quick Quote GNR - Free Report) tracks S&P Global Natural Resources Index and the FlexShares Morningstar Global Upstream Natural Resources ETF ( GUNR Quick Quote GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. SPDR S&P Global Natural Resources ETF has $3.54 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.44 billion. GNR has an expense ratio of 0.40% and GUNR charges 0.46%. 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.