Additionally, there is the prospect of increased mergers and acquisitions activity in some parts of the materials universe.

“The chemicals portion of the sector remains stable as result of consistent demand and pricing. We expect continued stability unless a recession occurs. We also see the potential for M&A due to the consistent free cash flow profiles of many chemical issuers and the still low interest rates available to many corporate borrowers,” notes Morningstar.

Investors have added over $272 million to XLB since the start of the fourth quarter.

The Guggenheim S&P Equal Weight Materials ETF (NYSEArca: RTM), which equally weights components and includes a larger tilt toward smaller U.S. companies, holds larger tilts toward construction materials sub-sector.

For more information on the materials sector, visit our materials category.