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Should You Invest in the SPDR S&P Homebuilders ETF (XHB)?

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The SPDR S&P Homebuilders ETF (XHB - Free Report) was launched on 01/31/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Industrials - Engineering and Construction segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Engineering and Construction is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.89 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Engineering and Construction segment of the equity market. XHB seeks to match the performance of the S&P Homebuilders Select Industry Index before fees and expenses.

The S&P Homebuilders Select Industry Index represents the homebuilding sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the US common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Homebuilders Index is a modified equal weight index.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.58%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Discretionary sector--about 61.80% of the portfolio, followed by Industrials.

Looking at individual holdings, Williams Sonoma Inc (WSM - Free Report) accounts for about 3.67% of total assets, followed by Johnson Controls Internation (JCI - Free Report) and Smith (a.o.) Corp (AOS - Free Report) .

The top 10 holdings account for about 34.98% of total assets under management.

Performance and Risk

The ETF has gained about 1.87% so far this year and it's up approximately 8.27% in the last one year (as of 02/12/2025). In that past 52-week period, it has traded between $97.38 and $125.54.

The ETF has a beta of 1.48 and standard deviation of 27.86% for the trailing three-year period, making it a high risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.

Alternatives

SPDR S&P Homebuilders ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XHB is a sufficient option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Invesco Building & Construction ETF (PKB - Free Report) tracks Dynamic Building & Construction Intellidex Index. The fund has $404.74 million in assets. PKB has an expense ratio of 0.57%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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