SPDR S&P Homebuilders (ETF) (XHB) — This ETF, which tracks the performance of the S&P Homebuilders Select Industry Index, has significantly outperformed the market. Year to date, XHB is up 7% while the S&P 500 is virtually unchanged. In the past 12 months, the fund has delivered a nearly 14% return compared with just 4% for the broader market index.
Capital IQ gives the ETF an overall rating of “overweight.” XHB has a low expense ratio of 0.35% and an annual yield of 0.45%.
The fund’s top 10 holdings are Ryland Group Inc (RYL), Lennar Corporation (LEN), Standard Pacific Corp. (SPF), Aaron’s, Inc. (AAN), PulteGroup, Inc. (PHM), M.D.C. Holdings, Inc. (
MDC), Owens Corning (OC), D.R. Horton, Inc. (DHI), Tempur Sealy International Inc (TPX) and Toll Brothers Inc (TOL).
XHB is in a clear bull channel that began in January 2012 at just under $20 a share. This year, we have seen three buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR), be triggered, the latest as XHB reversed from its 50-day moving average at about $36 on July 7.
The 50-day moving average has been a mid-support line within the bull channel. The lower support line is at $35.50, and resistance is at about $38.50.
This is not a trading recommendation; however, for investors seeking representation in the homebuilder group, XHB is an excellent and relatively inexpensive method of producing solid long-term gains. My 12-month target is $42, which would result in a 15% advance from the current price.
