Designed to provide broad exposure to the Materials - Broad segment of the equity market, the Materials Select Sector SPDR ETF (XLB) is a passively managed exchange traded fund launched on December 16, 1998.
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.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
Index Details
The fund is sponsored by State Street Investment Management. It has amassed assets over $5.5 billion, making it one of the largest ETFs attempting to match the performance of the Materials - Broad segment of the equity market. XLB seeks to match the performance of the Materials Select Sector Index before fees and expenses.
The Materials Select Sector Index seeks to provide an effective representation of the materials sector of the S&P 500 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 0.08%, making it the least expensive product in the space.
It has a 12-month trailing dividend yield of 1.94%.
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 Materials sector -- about 100% of the portfolio.
Looking at individual holdings, Linde Plc (LIN) accounts for about 16.27% of total assets, followed by Newmont Corp (NEM) and Sherwin Williams Co/the (SHW).
The top 10 holdings account for about 61.58% of total assets under management.
Performance and Risk
So far this year, XLB return is roughly 6.95%, and is down about 6.14% in the last one year (as of 10/16/2025). During this past 52-week period, the fund has traded between $74.27 and $97.63.
The ETF has a beta of 1.03 and standard deviation of 17.65% for the trailing three-year period, making it a medium risk choice in the space. With about 28 holdings, it has more concentrated exposure than peers.
Alternatives
Materials Select Sector SPDR 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, XLB is a good option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
SPDR S&P Metals & Mining ETF (XME) tracks S&P Metals & Mining Select Industry Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. SPDR S&P Metals & Mining ETF has $3.45 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $5.33 billion. XME has an expense ratio of 0.35%, and GUNR charges 0.46%.
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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Materials Select Sector SPDR ETF (XLB): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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