Although XLB has been mostly flat this month, seasonal factors could conspire against the largest materials ETF. XLB is usually the second-worst of the nine SPDRs in August and things do not get any better in September as XLB is historically the worst sector SPDR in the ninth month of the year. [Sector ETF Ideas for August]
XLB and other materials ETFs have also been hampered by investors preferring low volatility sectors over higher beta fare. Materials stocks reside in the latter category.
Beta is a common measure of volatility, or systematic risk, of a security or portfolio, compared to the broader marketplace. A beta reading above 1 indicates that the security is more volatile than broader equities market, whereas a beta of less than 1 corresponds to lower volatility. Potential investors should know that a higher beta may generate greater returns at greater risks while low-beta securities are considered a more conservative play.
Chart Courtesy: Kimble Charting Solutions