#7 - SPDR S&P Homebuilders ETF (NYSEARCA:XHB)
Last on this list of housing stocks is the SPDR S&P Homebuilders ETF (NYSEARCA: XHB). Exchange-traded funds are an effective way for investors to get exposure to a particular sector while smoothing out the volatility and risk that comes with owning any individual stock.
One of the reasons to like the XHB ETF is that its holdings include several homebuilders as well as companies in homebuilding adjacent industries such as The Home Depot, Williams-Sonoma, Inc. (NYSE: WSM), and Whirlpool Corporation (NYSE: WHR). This smooths out the risk even more because the performance of the ETF is not completely linked to the up-and-down of the housing starts numbers.
As of August 28, 2023, the company has $1.29 billion in assets under management and has an appealing expense ratio of just 0.35%.
About SPDR S&P Homebuilders ETF
SPDR S&P Homebuilders ETF (the Fund) seeks to closely match the returns and characteristics of the S&P Homebuilders Select Industry Index. 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 United States common stocks listed on the New York Stock Exchange, American Stock Exchange, National Association of Securities Dealers Automated Quotation (NASDAQ) National Market and NASDAQ Small Cap exchanges.
More about SPDR S&P Homebuilders ETF- Current Price
- $100.51
- Asset Class
- Equity
- Fund AUM
- $1.24 billion
- Expense Ratio
- 0.35%
- 6-Month Performance
- -13.47%
- 1-Year Performance
- -6.51%
The housing market is one of the cylinders that the engine of the economy relies on. When the housing market is weak, consumers feel like they have less purchasing power. And with fewer homeowners, there's less need for the products and service that are needed to keep homes in working order.
So far, however, that's where demand has been resilient. That doesn't mean that you can sound an all-clear for housing stocks. The bearish case largely comes from interest rates.
It's a math problem, and not a very complicated one. If you currently own a home with a mortgage that pays less than 4% - as many Americans do – there's little incentive to sell your home if you'll be carrying a mortgage of 8% and possibly higher.
But this has been the case for nearly 2 years, and so far, the housing market is stronger than many analysts expect. In any event, the housing market will be one of the sectors that leads the economy back. That's why now may be a good time to take a position in one or more of the stocks in this presentation.
More Investing Slideshows:
