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Top 10 Materials Sector ETFs

Our goal in this profile is to help investors wade through the many competing ETF offerings available. Using our long experience as an ETF publication, we can help select those ETFs that matter and may or may not be repetitive. The result is a more manageable list of issues from which to view and make selections.

The materials sector represents the well-springs of industrial growth given whatever the demand is for raw materials found in base metals and even petroleum. Weak stocks in this sector equate well with the state of manufacturing conditions.

There are currently more than 14 ETFs oriented to the materials sector with more on the way. The following analysis features a fair representation of ETFs available. We believe from these investors may choose an appropriate ETF to satisfy the best index-based offerings individuals and financial advisors may utilize.

We're not ranking these ETFs favoring one over another so don't let the listing order mislead you. Although we may use some of these in ETF Digest portfolios it's not our intention to recommend one over another.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones and so forth. Also included are some so-called "enhanced" indexes that attempt to achieve better performance through more active management of the index.

Where competitive issues exist and/or repetitive issues available at a fee cost saving we mention those as other choices. New issues are coming to market consistently (especially globally) and sometimes these issues will need to become more seasoned before they may be included at least in our listings.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

XLB (SPDR Materials Sector ETF) follows the Materials Select Sector Index. The fund was launched in December 1998. The expense ratio is .20%. AUM (Assets under Management) equal $1.8 billion and average daily trading volume is over 15.6M shares. As of late September 2011 the annual dividend yield is 2.61%. and YTD performance is -21.27%.

There are leveraged inverse and long ETFs available for hedging or speculation from ProShares and Direxion Shares.

Data as of September 2011

XLB Top Ten Holdings & Weightings

  1. E.I. du Pont de Nemours & Company (DD): 11.34%
  2. Freeport-McMoRan Copper & Gold B (FCX): 11.30%
  3. Monsanto Company (MON): 9.35%
  4. The Dow Chemical Co (DOW): 8.46%
  5. Praxair, Inc. (PX): 7.58%
  6. Newmont Mining Corporation (NEM): 5.91%
  7. Air Products & Chemicals Inc (APD): 4.39%
  8. Alcoa Inc (AA): 3.50%
  9. CF Industries Holdings Inc (CF): 3.39%
  10. Ecolab, Inc. (ECL): 3.21%

IYM (iShares DJ Basic Materials ETF) follows the Dow Jones U.S. Basic Materials Index. The fund was launched in June 2006. The expense ratio is .48%. AUM is $550 million and average daily trading volume is 900K shares. As of late September 2011 the annual dividend yield is 1.43% and YTD return -24.40%.

Data as of September 2011

IYM Top Ten Holdings & Weightings

  1. E.I. du Pont de Nemours & Company (DD): 9.14%
  2. Freeport-McMoRan Copper & Gold B (FCX): 9.12%
  3. The Dow Chemical Co (DOW): 6.86%
  4. Newmont Mining Corporation (NEM): 6.22%
  5. Praxair, Inc. (PX): 6.15%
  6. Air Products & Chemicals Inc (APD): 3.34%
  7. Alcoa Inc (AA): 2.80%
  8. Peabody Energy Corporation (BTU): 2.71%
  9. CF Industries Holdings Inc (CF): 2.67%
  10. Ecolab, Inc. (ECL): 2.57%

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