Morningstar Rating

ETF Research and Analysis

by Alex Bryan
Materials Select Sector SPDR XLB invests in materials companies in the S&P 500. This includes firms operating in the chemicals, metals and mining, paper and forest products, containers and packaging, and construction   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.
The fund's holdings may outperform during periods of strong economic growth. Read more 

Bear Case

Infrastructure investment in China may continue to slow over the long term, which could create a headwind for the fund's holdings.
New capacity may squeeze margins in the chemicals industry.
The fund's holdings operate in highly cyclical industries, where it is difficult to establish sustainable competitive advantages, and have to contend with volatile input prices.  Read more 

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