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Is SPDR S&P Homebuilders ETF (XHB) a Strong ETF Right Now?
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Designed to provide broad exposure to the Industrials ETFs category of the market, the SPDR S&P Homebuilders ETF (XHB - Free Report) is a smart beta exchange traded fund launched on 01/31/2006.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
XHB is managed by State Street Global Advisors, and this fund has amassed over $1.95 billion, which makes it one of the larger ETFs in the Industrials ETFs. XHB, before fees and expenses, seeks to match the performance of the S&P Homebuilders Select Industry Index.
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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 0.67%.
Sector Exposure and Top Holdings
ETFs offer 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.
XHB's heaviest allocation is in the Consumer Discretionary sector, which is about 54.50% of the portfolio. Its Industrials and Energy round out the top three.
Taking into account individual holdings, Williams Sonoma Inc (WSM - Free Report) accounts for about 4.63% of the fund's total assets, followed by Dr Horton Inc (DHI - Free Report) and Lennar Corp A (LEN - Free Report) .
The top 10 holdings account for about 40.79% of total assets under management.
Performance and Risk
The ETF has added roughly 13.69% so far this year and was up about 68.36% in the last one year (as of 04/08/2024). In the past 52-week period, it has traded between $65.40 and $111.59.
XHB has a beta of 1.42 and standard deviation of 27.27% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Homebuilders ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Invesco Building & Construction ETF (PKB - Free Report) tracks Dynamic Building & Construction Intellidex Index and the iShares U.S. Home Construction ETF (ITB - Free Report) tracks Dow Jones U.S. Select Home Construction Index. Invesco Building & Construction ETF has $300.04 million in assets, iShares U.S. Home Construction ETF has $3.12 billion. PKB has an expense ratio of 0.62% and ITB charges 0.40%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
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.
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Is SPDR S&P Homebuilders ETF (XHB) a Strong ETF Right Now?
Designed to provide broad exposure to the Industrials ETFs category of the market, the SPDR S&P Homebuilders ETF (XHB - Free Report) is a smart beta exchange traded fund launched on 01/31/2006.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
XHB is managed by State Street Global Advisors, and this fund has amassed over $1.95 billion, which makes it one of the larger ETFs in the Industrials ETFs. XHB, before fees and expenses, seeks to match the performance of the S&P Homebuilders Select Industry Index.
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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 0.67%.
Sector Exposure and Top Holdings
ETFs offer 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.
XHB's heaviest allocation is in the Consumer Discretionary sector, which is about 54.50% of the portfolio. Its Industrials and Energy round out the top three.
Taking into account individual holdings, Williams Sonoma Inc (WSM - Free Report) accounts for about 4.63% of the fund's total assets, followed by Dr Horton Inc (DHI - Free Report) and Lennar Corp A (LEN - Free Report) .
The top 10 holdings account for about 40.79% of total assets under management.
Performance and Risk
The ETF has added roughly 13.69% so far this year and was up about 68.36% in the last one year (as of 04/08/2024). In the past 52-week period, it has traded between $65.40 and $111.59.
XHB has a beta of 1.42 and standard deviation of 27.27% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Homebuilders ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Invesco Building & Construction ETF (PKB - Free Report) tracks Dynamic Building & Construction Intellidex Index and the iShares U.S. Home Construction ETF (ITB - Free Report) tracks Dow Jones U.S. Select Home Construction Index. Invesco Building & Construction ETF has $300.04 million in assets, iShares U.S. Home Construction ETF has $3.12 billion. PKB has an expense ratio of 0.62% and ITB charges 0.40%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
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.