Should You Invest in the State Street SPDR S&P Homebuilders ETF (XHB)?

If you're interested in broad exposure to the Industrials - Engineering and Construction segment of the equity market, look no further than the State Street SPDR S&P Homebuilders ETF (XHB), a passively managed exchange traded fund launched on January 31, 2006.Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Engineering and Construction is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.Index DetailsThe fund is sponsored by State Street Investment Management. It has amassed assets over $1.66 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 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.CostsExpense 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 0.77%.Sector Exposure and Top HoldingsEven 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 67.1% of the portfolio, followed by Industrials.Looking at individual holdings, Champion Homes Inc (SKY) accounts for about 4.1% of 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 RiskThe ETF has added about 0.39% so far this year and is down about 0.64% in the last one year (as of 12/24/2025). In that past 52-week period, it has traded between $86.79 and $119.58.The ETF has a beta of 1.31 and standard deviation of 25.29% 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.AlternativesState Street 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 $289.00 million in assets. PKB has an expense ratio of 0.57%.Bottom 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