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S&P Homebuilders ETF (XHB) Hits New 52-Week High

Sweta Jaiswal, FRM

For investors looking for momentum, SPDR S&P Homebuilders ETF XHB is probably a suitable pick. The fund just hit a 52-week high, up roughly 44.7% from its 52-week low of $30.56/share.

But does it have more gains in store? Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:

XHB in Focus

The fund seeks to replicate investment results which, before fees and expenses, correspond generally to the total return performance of the S&P Homebuilders Select Industry Index. It provides exposure to the homebuilders segment of the S&P TMI, which comprises the following sub-industries: Building Products, Home Furnishings, Home Improvement Retail, Homefurnishing Retail, and Household Appliances. XHB is charging 35 bps in fees. The fund has amassed $674.6 million in AUM.

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Why the Move?

The Fed has cut interest rate by 25 basis points to the range of 1.75-2% for the second time at the FOMC meeting last month. When interest rate drops, mortgage rates fall, making real estate or refinancing mortgages more affordable. This in turn results in higher real estate sales. Further, Sino-US trade war tensions, uncertainty in markets due to geopolitical tensions, slowdown in the global economy and Brexit woes are making investors jittery, adding to the lure of these funds. This is because these funds offer outsized yields and act as good investing options when increased safe-haven trade keeps yields at check.

More Gains Ahead?

Currently, XHB has a Zacks Rank #3 (Hold) with a High-risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, it seems XHB might remain strong given a positive weighted alpha of 22.80.

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SPDR S&P Homebuilders ETF (XHB): ETF Research Reports
 
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