Launched on January 31, 2006, the SPDR S&P Homebuilders ETF (XHB) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Engineering and Construction segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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 10, placing it in bottom 38%.
Index Details
The fund is sponsored by State Street Investment Management. It has amassed assets over $1.82 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 0.67%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 68.5% of the portfolio, followed by Industrials.
Looking at individual holdings, Topbuild Corp (BLD) accounts for about 3.85% of total assets, followed by Installed Building Products (IBP) and Builders Firstsource Inc (BLDR).
The top 10 holdings account for about 35.36% of total assets under management.
Performance and Risk
So far this year, XHB has added about 10.29%, and it's up approximately 2.9% in the last one year (as of 08/20/2025). During this past 52-week period, the fund has traded between $86.79 and $125.54.
The ETF has a beta of 1.26 and standard deviation of 26.94% 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 sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. XHB, then, is not a suitable option for investors seeking exposure to the Industrials ETFs segment of the market. However, there are better ETFs in the space to consider.
Invesco Building & Construction ETF (PKB) tracks Dynamic Building & Construction Intellidex Index. The fund has $274.06 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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SPDR S&P Homebuilders ETF (XHB): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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