Is State Street SPDR S&P Homebuilders ETF (XHB) a Strong ETF Right Now?

Launched on 01/31/2006, the State Street SPDR S&P Homebuilders ETF (XHB) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.What Are Smart Beta ETFs?The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.Fund Sponsor & IndexBecause the fund has amassed over $1.65 billion, this makes it one of the larger ETFs in the Industrials ETFs. XHB is managed by State Street Investment Management. This particular fund 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 U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Homebuilders Index is a modified equal weight index.Cost & Other ExpensesExpense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.Operating expenses on an annual basis are 0.35% for XHB, making it one of the least expensive products in the space.It's 12-month trailing dividend yield comes in at 0.77%.Sector Exposure and Top HoldingsETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.This ETF has heaviest allocation in the Consumer Discretionary sector - about 67% of the portfolio. Industrials and Energy round out the top three.When you look at individual holdings, Champion Homes Inc (SKY) accounts for about 4.1% of the fund's total assets, followed by Somnigroup International Inc (SGI) and Cavco Industries Inc (CVCO).The top 10 holdings account for about 36.92% of total assets under management.Performance and RiskYear-to-date, the State Street SPDR S&P Homebuilders ETF has added roughly 0.34% so far, and is up roughly 0.34% over the last 12 months (as of 12/31/2025). XHB has traded between $86.79 $119.58 in this past 52-week period. XHB has a beta of 1.31 and standard deviation of 25.22% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers .AlternativesState Street SPDR S&P Homebuilders ETF is not a suitable option for investors seeking to outperform the Industrials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.Invesco Building & Construction ETF(PKB) tracks Dynamic Building & Construction Intellidex Index The fund has $285.28 million in assets. PKB has an expense ratio of 0.57%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFsBottom LineTo 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.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report State Street SPDR S&P Homebuilders ETF (XHB): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks