Is it worth investing in the Materials Select Sector SPDR ETF?

Are you looking for broad exposure to Materials – Broad segment of the stock market? You should consider Materials Select SPDR ETF sector (NYSE:XLB), a passively managed exchange-traded fund launched on December 16, 1998.

While passively managed ETFs are a great tool for long-term investors, they are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility and tax efficiency.

Investor-friendly sector ETFs provide many opportunities to gain low risk and diversified exposure to a wide range of companies in specific sectors. Materials – Broad is one of the 16 broad Zacks Industry Sectors. He currently ranks 6th, putting him in the top 38%.

Index details

The fund’s sponsor is State Street Global Advisors. It has accumulated assets of more than $5.63 billion, making it one of the largest ETFs trying to match the performance of the broad segment of the stock market. XLB seeks to match the performance of the Materials Select sector index before taking into account fees and expenses.

The Materials Select Sector Index is designed to effectively represent the materials sector in the S&P 500 Index.

Costs

Investors should also pay attention to an ETF’s expense ratio. Lower-cost products will produce better results than higher-cost ones, assuming all other metrics remain the same.

The annual operating costs of this ETF are 0.09%, making it one of the cheapest products on the market.

Its trailing 12-month dividend yield is 1.88%.

Sector exposure and largest assets

ETFs offer diversified exposure, thereby minimizing the risk of a single stock, but it is still important to familiarize yourself with the fund’s holdings before investing. Most ETFs are very transparent products, and many of them disclose their holdings on a daily basis.

This ETF has the largest allocation to the Materials sector – approximately 100% of the portfolio.

Looking at individual farms, Linde limited liability company (NASDAQ:LIN) accounts for approximately 21.97% of total assets, followed by Sherwin Williams Co (NYSE:SHW) i Freeport Mcmoran Inc (NYSE:FCX).

The 10 largest holdings account for approximately 66.61% of total assets under management.

Performance and risk

Year-to-date, the Materials Select Sector SPDR ETF is up approximately 6.77% so far, and has increased approximately 21.61% over the last 12 months (as of May 29, 2024). Over the last 52 weeks, XLB has traded between $74.46 and $93.06.

The ETF has a beta of 1.10 and a standard deviation of 19.28% for the trailing three-year period, making it a medium-risk pick in this area. It has approximately 31 farms and has more concentrated exposure than comparable farms.

Alternatives

Materials Select Sector SPDR ETF carries a Zacks ETF Rank of 2 (Buy), which is based on asset class expected return, expense ratio and momentum, among other factors. For this reason, XLB is a great option for investors looking for exposure to the ETF materials market segment. There are other additional ETFs on the market that investors may also consider.

SPDR S&P Global Natural Resources ETF (NYSE:GNR) tracks the S&P Global Natural Resources Index i FlexShares Morningstar Global Upstream Natural Resources ETF (NYSE:GUNR) tracks the Morningstar Global Natural Resources Index. The SPDR S&P Global Natural Resources ETF has $3.43 billion in assets and the FlexShares Morningstar Global Upstream Natural Resources ETF has $6.45 billion. GNR has an expense ratio of 0.40% and GUNR fees are 0.46%.

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