Sector ETFs: Build a Strong Foundation with XHB

The homebuilder’s market has been hit pretty hard in the last 2 years by the resounding pop of the housing market, but at some point, they’re due for a turn of fortune. If you’re a strong believer in the recovery of the housing market and feel that the future for homebuilders appears bright, or at least brighter than it’s been in the last few years, then here’s an easy and efficient way to invest in the homebuilder’s market.

SPDR S&P Homebuilders (NYSE: XHB) is an exchange traded fund (ETF) that seeks to replicate the performance of an index derived from the homebuilding segment of the U.S. total market composite index before expenses. translate Meaning, it’s a way for you to invest in homebuilders and companies that support home building, across the board rather than trying to pick and choose a single company to hedge your bets with.

With an investment in XHB you’ll get shares of noted representatives from that field such as Home Depot (NYSE: HD) and Lowes (NYSE: LOW), two well-known leaders in the home improvement retail field, Ethan Allen Interiors Inc. (NYSE: ETH) a home furnishing staple, Centex Corporation (NYSE: CTX) a homebuilding giant, and Leggett & Platt Inc. (NYSE: LEG) who produces components and products used worldwide in the creation of homes and furnishings. An obvious reach into every area of the homebuilding market, using some of the most trusted companies around.

Its anyone’s guess when XHB will rise, but since the beginning of 2007, XHB has lost about 67% of its value.

For only a 0.35% fee the fund tracks the total return and performance of the S&P Homebuilders Select Industry index and derives the strongest basket of holdings. You’d pay up about 3-5 times that amount to have a money manager at a mutual fund provide the same results. Review the incredible diversity of XHP by examining its top 10 holdings listed below.

4.91% CENTEX
5.02% ETHAN ALLEN INTERIOR
5.09% HOME DEPOT INC
4.89% LEGGETT PLATT INC
4.88% LENNAR
4.99% LOWEST CMPANIES
5.11% MERITAGE HOMES CORP
4.88% MOHAWK INDS INC
4.92% RYLAND GROUP INC
5.06% TOLL BROTHERS INC