Is It Time to Get Materialistic With ETFs? | ETF Trends

The markets responded to the upside during Monday’s trading session on the news that U.S. president Donald Trump returned back to the White House after being diagnosed with the coronavirus. One of the sectors ticking higher was materials, which fed into strength for certain exchange-traded funds (ETFs).

“The materials Sector SPDR ETF rose 2% midday Monday, the strongest performer among the 11 funds tracking sectors of the S&P 500,” a MarketWatch article noted. “It was the fund’s biggest gain in five weeks. Investor interest in materials signals confidence in an improving economy. On Monday, a purchasing manager’s index covering the service sector was stronger than expected, pointing to sturdier growth ahead. Competing products were also higher: the iShares U.S. Basic Materials ETF gained 2%, while the Vanguard Materials ETF was up 2.2%. Some of the best-performing individual stocks in the sector include Albemarle Corporation, up 5.3% on Monday, and Mosaic Co., up 4.3%. In the year to date, XLB is up 3.1%, fifth among the sector SPDRs.”

^SP100M Chart

^SP100M data by YCharts

Here are a few of the funds mentioned:

  • Materials Select Sector SPDR Fund (XLB): seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of publicly traded equity securities of companies in the Materials Select Sector Index. In seeking to track the performance of the index, the fund employs a replication strategy. It generally invests substantially all, but at least 95%, of its total assets in the securities comprising the index. The index includes securities of companies from the following industries: chemicals; metals and mining; paper and forest products; containers and packaging; and construction materials.
  • Vanguard Materials Index Fund ETF Shares (VAW): seeks to track the performance of a benchmark index. The fund employs an indexing investment approach designed to track the performance of the MSCI US Investable Market Index (IMI)/Materials 25/50, an index made up of stocks of large, mid-size, and small U.S. companies within the materials sector, as classified under the Global Industry Classification Standard (GICS). The Advisor attempts to replicate the target index by seeking to invest all, or substantially all, of its assets in the stocks that make up the index, in order to hold each stock in approximately the same proportion as its weighting in the index.
  • iShares U.S. Basic Materials ETF (IYM): seeks to track the investment results of the Dow Jones U.S. Basic Materials Index composed of U.S. equities in the basic materials sector. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. The underlying index measures the performance of the basic materials sector of the U.S. equity market.

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