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Asset Class: Natural Resources Sector
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Oldest ETF back tested: The Materials Select Sector SPDR® Fund (XLB)
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Correlation to U.S. Stock Market: 0.81
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Long-Term Performance: 7.98% CAGR
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S&P 500 Performance: 7.12% CAGR
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Back test timeframe: January 1999 – December 2020
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Number of ETFs available in this asset class: 33
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Number of ETFs in this asset class that are 10-years old or older: 23
XLB vs SPY: January 1999 – December 2020
XLB vs SPY: December 22, 1998 – January 8, 2021
The Deep Value ETF Accumulator rankings for the 23 oldest Natural Resources sector ETFs:
The 4 top ranked Natural Resources sector ETFs head-to-head comparisons:
RTM vs FXZ vs PYZ vs CGW: June 2007 – December 2020
RTM vs FXZ vs PYZ vs CGW: May 14, 2007 – January 8, 2021
Stated objectives of 4 top ranked Natural Resources sector ETFs:
RTM – The Invesco S&P 500® Equal Weight Materials ETF (Fund) is based on the S&P 500® Equal Weight Materials Index (Index). The Fund will invest at least 90% of its total assets in common stocks that comprise the Index. The Index equally weights stocks in the materials sector of the S&P 500® Index. The Fund and the Index are rebalanced quarterly.
FXZ – The First Trust Materials AlphaDEX® Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuant® Materials Index. The StrataQuant® Materials Index is an “enhanced” index developed, maintained and sponsored by ICE Data Indices, LLC or its affiliates (“IDI”) which employs the AlphaDEX® stock selection methodology to select stocks from the Russell 1000® Index. IDI constructs the StrataQuant® Materials Index by ranking the stocks which are members of the Russell 1000® Index on growth factors including three, six and 12-month price appreciation, sales to price and one year sales growth, and, separately, on value factors including book value to price, cash flow to price and return on assets. All stocks are ranked on the sum of ranks for the growth factors and, separately, all stocks are ranked on the sum of ranks for the value factors. Each stock receives either its growth or value score rank as its selection score based on its style designation as determined by Russell. Stocks which Russell allocates between both growth and value receive the better of their growth or value score rank as their selection score. IDI then ranks those stocks contained in the materials sector according to their score. The greater of the top 75% of the eligible universe or 40 stocks is selected for the StrataQuant® Materials Index. If the total count of eligible stocks in the materials sector falls below 40, all eligible stocks will be included. The selected stocks are divided into quintiles based on their rankings and the top ranked quintiles receive a higher weight within the index. The stocks are equally-weighted within each quintile. The index is reconstituted and rebalanced quarterly.
PYZ – The Invesco DWA Basic Materials Momentum ETF (Fund) is based on the Dorsey Wright® Basic Materials Technical Leaders Index (DWA Basic Materials Technical Leaders Index). The Fund will normally invest at least 90% of its total assets in the securities that comprise the Index. The Index is designed to identify companies that are showing relative strength (momentum), and is composed of at least 30 securities from the NASDAQ US Benchmark Index. Relative strength is the measurement of a security’s performance in a given universe over time as compared to the performance of all other securities in that universe. The Fund and the Index are rebalanced and reconstituted quarterly.
CGW – The Invesco S&P Global Water Index ETF (the “Fund”) is based on the S&P Global Water Index (the “Index”). The Fund will invest at least 90% of its total assets in the securities American depositary receipts (ADRs) and global depositary receipts (GDRs) that comprise the Index. The Index is comprised of developed market securities including water utilities, infrastructure, equipment, instruments and materials. The index is computed using the net return, which withholds applicable taxes for non-resident investors. The Fund and the Index are rebalanced semiannually.
Thank you for taking time to read this article. If you found it useful, please share it with a friend.
Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator
Previous Deep Value ETF Accumulator articles on Natural Resources sector ETFs:
4 Best Long-Term Performance Natural Resources Sector ETFs 1.3
Disclosure: We currently own shares of RTM and we intend to buy more shares in the future. I am not a professional investment advisor. Please perform your own due diligence or seek the advice of a Registered Investment Advisor before investing in any security mentioned in this article. This website contains affiliate links to M1 Finance and Google AdSense.