“Most materials companies produce commodity products and operate in a highly cyclical industry,” Morningstar says in a profile of iShares Dow Jones US Basic Materials.

“Aside from issues relating to cyclicality, many holdings in this fund face volatile raw material and energy prices, high fixed costs, and growing competitive threats from new, and potentially lower-cost, production capacity outside the U.S.,” it notes.

iShares Dow Jones US Basic Materials