XLB Offers Diverse Exposure to Building, Chemical, and Industrial Companies
Denver, CO
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April 07, 2023 01:27 PM Eastern Daylight Time
America could be entering a building boom once again. The chemicals, metals and mining, paper and forest products, containers and packaging, and construction materials needed during this boom are in strong demand. Exposure to these industries can be easily accessed by investors through the exchange-traded fund, Materials Select Sector SPDR Fund (XLB).
XLB holds the industry leaders for these key businesses that drive the U.S. economy
A common predecessor of an economic rebound is an increase in construction building permits, which is happening in the commercial and multifamily residential sectors. Residential single-family building is also coming back as interest rates stabilize, but at a slower pace than commercial and multifamily projects.
The Department of Labor reported this month that construction spending has been increasing, and thus the demand for building materials, chemicals, and other products which XLB represents.
While inflation persists and is coming down incrementally, the supply and demand equation works into XLB’s favor. The more demand there is, the more pricing power building materials can leverage.
Exposure to the Industry Leaders
XLB tracks a market-cap-weighted index of U.S. basic materials companies. The fund includes only components of the S&P 500.
The ETF’s Index is primarily composed of companies involved in such industries as chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products.
XLB offers exposure to these companies dominant in their industries, some of which have been around more than 100 years.
Company Weightings*
Linde plc, the largest chemical producer in the world, is the top constituent at 19.30%* weighting, more than twice as big as the other holdings. Geographically concentrated funds can be volatile, but Linde operates throughout the world to mitigate some of those regional differences for building material needs.
The other top holdings and their weightings are Air Products and Chemicals, Inc. (7.03%); Freeport McMoRan (6.45%); and Sherwin-Williams (5.84%). Another 25 companies are included in this index, all with smaller weightings.
The Materials Sector SPDR fund, with over $6.5 billion in assets under management, is actively traded and carries a low expense ratio of 0.10%** per year, making it popular with many financial advisors and investors.
A diversified portfolio could include XLB for easy access to this sector which includes chemicals, steel, timber, masonry, etc., used in all commercial and residential construction.
The key is knowing where to see the sweet spots in the industry and XLB from Select Sector SPDR makes that easy and affordable for diversified investor portfolios, big and small.
DISCLAIMER: This is a work of research and should not be taken as investment or financial advice. Therefore, Select Sector SPDRs or the publisher is not liable for any decision made based on the publication.
About the Company:
Select Sector SPDR ETFs offer flexibility and customization opportunities. Many investors have
similar outlooks, but no two are exactly alike. Select Sector SPDR ETFs let investors select the
sectors that best meet their investment goals.
* Holdings, Weightings & Assets as of 3/31/23 subject to change
** Ordinary brokerage fees apply
DISCLOSURES
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock market. The index is heavily weighted toward stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The S&P 500 Index figures do not reflect any fees, expenses or taxes. An investor should consider investment objectives, risks, fees and expenses before investing.
One may not invest directly in an index.
Transparent ETFs provide daily disclosure of portfolio holdings and weightings
All ETFs are subject to risk, including loss of principal. Sector ETF products are also subject to sector risk and nondiversification risk, which generally will result in greater price fluctuations than the overall market. Diversification does not eliminate risk
An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call 1-866-SECTOR-ETF (732-8673) or visit www.sectorspdrs.com. Read the prospectus carefully before investing.
ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is distributor for the Select Sector SPDR Trust.
Media Contact:
Company: Select Sector SPDRs
Contact: Dan Dolan*
Address: 1290 Broadway, Suite 1000, Denver, CO 80203
Country: United States
Email: dan.dolan@sectorspdrs.com
Website: https://www.sectorspdrs.com/
*Dan Dolan is a Registered Representative of ALPS Portfolio Solutions Distributor, Inc. ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is the distributor for the Select Sector SPDR Trust.
Contact Details
Dan Dolan
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