XLB U.S. materials sector provides indirect exposure to commodity prices through the stocks of companies engaged in the extraction or production of natural resources. Because the materials sector often accounts for a small portion of broad-based benchmarks, XLB may be a useful tool for long-term investors looking for more balanced exposure to the U.S. equity market. It can also be handy for those looking to implement a shorter-term tilt towards the materials sector. Like most Sector SPDRs, XLB’s appeal lies in its cost efficiency and liquidity; it is among the cheapest funds in the Materials
Sector ETFs
This ETF is focused on the U.S. homebuilding industry, and as such offers exposure to a corner of the domestic economy that tends to be cyclical in nature. In addition to pure play homebuilders, this fund includes companies related generally to the homebuilding industry, such as Pier One. For investors seeking exposure to the homebuilding industry–or the closest thing to it available in an ETF wrapper–we think XHB is the best option out there. This fund is more cost efficient than other options such as PKB or ITB, and the equal weighting methodology ensures exposure is spread evenly across component companies.
EEM is one of the most popular ETFs in the world, and is one of the oldest products on the market offering exposure to stock markets of emerging economies. Given this objective, EEM can be used in a number of different ways; this ETF can be equally useful as a short-term trade to increase exposure to risky assets or as a core holding in a long-term, buy-and-hold portfolio. EEM
XLI: U.S. industrials sector offers access to transportation firms, commercial and professional services, and manufacturers of capital goods. Given the sector-specific focus, XLI likely doesn’t deserve a core allocation, but may be useful as a means of implementing a tactical tilt towards the industrials sector for a sector rotation strategy. The primary appeal of XLI lies in the impressive liquidity; used widely as a trading vehicle by active investors, XLI will generally feature very narrow bid-ask spreads. The depth of the XLI portfolio, however, leaves something to be desired. This ETF has far fewer holdings than options such as VIS, FIL, and IYJ, and also maintains a big weighting in GE.
offshore oil rig at sunset
XLE is U.S. energy industry, including many of the world’s largest oil producers. Compared to other energy options, XLE is impressive in terms of both cost efficiency and liquidity; investors can generally expect to execute at penny wide spreads. But like many funds offering exposure to the energy sector, XLE maintains some concentration issues, as a few stocks account for big chunks of the total portfolio.
The XRT ETF offers exposure to the U.S. retail industry, a targeted sub-sector of the consumer discretionary space that may have appeal for investors looking to bet on increased consumer consumption in the domestic market. XRT is probably too targeted for any investor with a long-term buy-and-hold strategy, Filled with numerous home furnishings & decor companies as well as some automotive dealership groups as well
This ETF gives investors an opportunity to achieve exposure to uranium, an important mineral that currently is inaccessible via futures. For investors looking to bet on increased demand for a raw material used widely in power production, URA is a nice option. URA often trades as a leveraged play on the underlying natural resources, meaning that this fund can experience significant volatility but can be a powerful tool for profiting from a surge in commodity prices.
XLK includes market segments like IT services, wireless telecommunication services, and semiconductors to name just a few. The fund invests in the who’s-who of the U.S. tech sector, with major holdings in companies like Apple and IBM. The fund splits its assets mainly between the technology and communication services sectors, while allocating mainly to giant and large cap firms. One of the major strengths of this ETF is the fact that it does not single out a particular sector; rather it invests in companies from all across the technology sector.
XLK includes market segments like IT services, wireless telecommunication services, and semiconductors to name just a few. The fund invests in the who’s-who of the U.S. tech sector, with major holdings in companies like Apple and IBM. The fund splits its assets mainly between the technology and communication services sectors, while allocating mainly to giant and large cap firms. One of the major strengths of this ETF is the fact that it does not single out a particular sector; rather it invests in companies from all across the technology sector.
MLPA seeks to replicate USA Oil master limited partnerships (MLP) asset class. MLPs have become very popular in recent years for primarily two reasons: (1) required quarterly distributions provide a steady stream of current income, and (2) because they are partnerships, MLPs avoid corporate income taxes at both the federal and state level as the the tax liability is passed through to the individual partners. By generating at least 90% of income from natural resource-based activities such as transportation and storage, an entity can qualify as an MLP