Morningstar Rating

ETF Research and Analysis

by Alex Bryan
Suitability
Cost-conscious investors should steer clear of iShares Dow Jones US Basic Materials Sector Index, which charges more than twice as much as its closest peers. We'd recommend Materials Select Sector SPDR XLB or Vanguard Materials   Read more 

Bull Case

Some of the fund's larger holdings in the chemicals industry are shifting their focus up the value chain toward less-cyclical, higher-margin specialty chemicals.
Low natural gas prices may continue to help the fund's North American chemical producers.  Read more 

Bear Case

IYM charges more than twice as much as VAW and XLB and has exhibited greater volatility over the past five years.
The fund's holdings operate in highly cyclical industries where it is difficult to establish sustainable competitive advantages.
New capacity may squeeze margins in the chemicals industry.  Read more 

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