The SPDR S&P Homebuilders ETF (NYSEArca:XHB) gives investors great exposure to the homebuilding sector. With a blend of industries within its portfolio, from homebuilders to home improvement retailers, this exchange-traded fund (ETF) offers a diversified exposure to the housing market. As the dynamics of the housing sector unfold, XHB stands as a potentially lucrative pathway for investors keen on riding the wave of this essential industry.
XHB houses a mix of stocks that are pivotal players in homebuilding. Some of the ETF’s top tickers are Williams Sonoma (NYSE:WSM), Home Depot (NYSE:HD), and Toll Brothers (NYSE:TOL). The fund gives investors exposure to many areas of homebuilding, from construction to the retail side of home improvement.
The fund has an expense ratio of 0.35% which isn’t terribly high. Investors are also getting some good value here as the average stock in the ETF trades at less than 12 times earnings. And with 35 holdings, it isn’t overly diverse, which isn’t a bad thing as that means the fund’s performance will be primarily due to companies which are closely tied to the housing market.
For investors, the allure of XHB is that it invests in both growing and stable industries. The ETF could serve as a hedge against certain market volatilities, given the essential nature of housing and the continual demand for home-related goods and services. And with the economy growing and getting bigger, there is still significant potential for growth in the long run. Year to date, the ETF is up 24% and over the past five years it has doubled in value.