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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: 8.77% CAGR
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S&P 500 Performance: 7.98% CAGR
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Back test timeframe: January 1999 – December 2021
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Number of ETFs available in this asset class: 38
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Number of ETFs in this asset class that are 10-years old or older: 25
XLB vs SPY: January 1999 – December 2021
XLB vs SPY: December 22, 1998 – January 14, 2022
The Deep Value ETF Accumulator rankings for the 25 oldest Natural Resources sector ETFs:
The 4 top ranked Natural Resources sector ETFs head-to-head comparisons:
FIW vs RTM vs FXZ vs CGW: June 2007 – December 2021
FIW vs RTM vs FXZ vs CGW: May 14, 2007 – January 14, 2022
Stated objectives of 4 top ranked Natural Resources sector ETFs:
FIW – The First Trust Water ETF 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 ISE Clean Edge Water Index. The ISE Clean Edge Water Index is a modified market capitalization-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the potable and wastewater industry. The Index begins by establishing the total population of stocks in the potable and wastewater industry and eliminates stocks which do not meet the Index’s baseline eligibility requirements. To meet Index eligibility, a stock must satisfy market capitalization, liquidity and weighting concentration requirements. The Index selects the top 36 stocks in the industry by market capitalization. The Index is rebalanced on the application of the above model on a semi-annual basis.
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.
CGW – The Invesco S&P Global Water Index ETF (Fund) is based on the S&P Global Water Index (Index). The Fund will invest at least 90% of its total assets in the securities and 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 nonresident 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 and Miscellaneous Sector ETFs:
4 Best Long-Term Performance Natural Resources Sector ETFs 1.4
4 Best Long-Term Performance Miscellaneous Sector ETFs 1.4
Disclosure: Last year, when I wrote my article covering Natural Resources ETFs, the ETF FIW fell under the Morningstar category called the Miscellaneous Sector. This year Morningstar has put FIW in the category called the Natural Resources sector. For that reason, we will be selling our shares of RTM within the next 72 hours. We currently own shares of FIW 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.