ETF Trends
ETF Trends

Materials sector exchange traded funds have been outperforming broader U.S. equities as global growth gains momentum, notably in the emerging markets.

The Materials Select Sector SPDR (NYSEArca: XLB) has gained 8.2% over the past month while the S&P 500 rose 3%.

The materials sector is expected to see earnings rise up to 6.5% for the fourth quarter as large companies in the sector profit on exposure to growth in the emerging markets, including Latin America and China, the Financial Times reports. [S&P Likes Materials ETFs on Emerging Market Demand]

On Tuesday, Monsanto (NYSE: MON) announced that its fiscal first-quarter profits almost tripled on corn seed sales to South America that jumped 27% and higher herbicide prices, the Wall Street Journal reports. Monsanto has been typically calm in the first quarter but demand in South America has kept the company going in a period of less demand in the U.S.

“One of the most obvious areas of [our fiscal]first- quarter strength is our corn performance, [and one]of the most important drivers there is Latin America,” Hugh Grant, chief executive, said in the Financial Times article.

Monsanto is the largest holding in XLB, accounting for 11.1% of the ETF. Other top holdings include du Pont de Nemours and Co (NYSE: DD) 9.0%, Dow Chemical (NYSE: DOW) 8.3%, Praxair (NYSE: PX) 7.1% and Freeport-McMoRan Copper & Gold (NYSE: FCX) 7.0%.

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