Exchange traded funds tracking the U.S. materials sector have been relatively active during a week of mostly subdued volumes.
Generally, “materials” relates to companies that are involved in industries including chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products, so it is indeed a diverse group of subsectors.
Materials Select Sector SPDR (NYSEArca: XLB) is the giant in the space, with nearly $2 billion in assets under management.
The iShares DJ U.S. Basic Materials (NYSEArca: IYM), Vanguard Materials (NYSEArca: VAW), First Trust Materials AlphaDEX (NYSEArca: FXZ), PowerShares Dynamic Basic Materials (NYSEArca: PYZ) and Rydex S&P Equal Weight Materials (NYSEArca: RTM) are other alternatives within the space that offer different index methodologies and weighting schemes as well as exposure to indexes outside of the S&P Basic Materials index that XLB follows.
The sector itself has considerably lagged the broader market recently. [Basic Materials Trail Market]
For example, XLB is down 15.07% year to date versus the S&P 500 down 4.16%, and in the railing one year period, XLB is down 6.32% versus the S&P 500 up 2.20%. This said, it does not outright shock us that the recent flows in the space have been on the sell side.