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The Materials Select Sector SPDR Fund ETF (NYSEARCA:XLB), which tracks the S&P 500 materials sector (SP500-15), rose about 8.78% in the first quarter of 2024, marginally underperforming the broader S&P 500 index, which grew 10.79% during the same period. The ETF had gained 10.2% in 2023.
The index has made it among the top-performing S&P 500 sectors in the past 1 month, driven by strong economic growth and a weakening US Dollar Index, as well as sector rotation into resource-based companies.
Within industrials, construction materials gained the most in Q1, rising over 23.56%, containers, and packaging grew 11.57%, while chemicals rose 7.41%, and metals and mining held the last spot, adding about 6.65%.
XLB has more than $5 billion in assets under management as of March 28, 2024, and among its largest components are Linde (LIN), Sherwin Williams (SHW), Freeport-McMoRan (FCX), Ecolab (ECL) and Air Products (APD). The materials-focused ETF had net inflows of $18.19M in Q1.
Top 5 S&P500 materials performers in Q1:
- Martin Marietta Materials (MLM) +25.03%
- Steel Dynamics (STLD) +24.66%
- Vulcan Materials (VMC) +22.06%
- Corteva (CTVA) +18.76%
- Ecolab (ECL) +16.50%
Bottom 5 S&P500 materials performers in Q1:
- Newmont (NEM) -12.39%
- Air Products & Chemicals (APD) -11.41%
- Mosaic (MOS) -11.02%
- Albemarle (ALB) -10.31%
- PPG Industries (PPG) -1.62%
What Quantitative Measures Say
XLB received a Buy rating from Seeking Alpha’s Quant Rating system with a score of 4.09 out of 5, supported by A+ in liquidity, and A in the expenses’ category. The ETF got an A- for momentum. However, it got a B for dividends and a D for risks.
What Analysts Expect
Seeking Alpha contributor Mike Zaccardi upgraded the ETF from a Hold to Buy.
“Fears of interest rates that will be higher for longer just don’t seem to have the same bearish impact they did at times in 2023, Zaccardi said, arguing that, for XLB and the Materials space, the fresh bout of momentum augers well for the month ahead.”
Seasonally, XLB tends to see about flat returns in March, but April is among the strongest months of the year, according to Seeking Alpha’s Seasonality tool.
