While equal-weight ETFs have been more than legitimized over the years, some critics allege that the advantages of these products are solely tied to deeper exposure to small-caps and/or value stocks. However, it is Guggenheim’s ability to efficiently rebalance ETFs such as RSP and RTM that tells the true story. Plus, RTM is not heavily tilted toward smaller stocks, nor is the materials sector notably inexpensive compared to the S&P 500.
In the past month, RTM and XLB are up 7.1% and 5.6%, respectively. However, devoted seasonal traders are unlikely to be surprised by the materials sector recent strength. Dating back to 1999, the first full year of trading for the nine sector SPDRs, XLB is historically the second-best performer in February, trailing only the Energy Select Sector SPDR (NYSEArca: XLE). [February’s Best Sector ETFs]
For now, it appears investors need some cajoling to get involved with materials ETFs. RTM has added $4.4 million in new assets this year, but XLB and the Vanguard Materials ETF (NYSEArca: VAW) have lost a combined $40 million.
With bearish sentiment just starting to ebb and the charts for RTM and XLB showing legitimate breakouts, investors may not wait too much longer to embrace the materials sector.
Guggenheim S&P Equal Weight Materials ETF
