By Market News Video Staff, Thursday, October 28, 7:58 AM ET
The SPDR S&P Homebuilders ETF (AMEX:XHB) seeks to closely match the returns and characteristics of the S&P Homebuilders Select Industry Index.
As with every ETF, it is important to understand the holdings, rather than just casually relying on a name to decide whether to invest.
An investor might see the word "homebuilders" in the name and assume that the whole ETF is made up of companies such as Toll Brothers (NYSE:TOL) or Lennar (NYSE:LEN).
But, in the case of the SPDR S&P Homebuilders ETF, that is simply not true. This ETF's top holding is Mohawk Industries (MHK), a floor covering company. Their second largest holding is Tempur Pedic International (NYSE:TPX), the bedding company, and then Owens Corning (NYSE:OC) which provides building materials and composities. Some other names in the top ten are Williams Sonoma (NYSE:WSM), Pier 1 Imports (NYSE:PIR), Bed Bath and Beyond (NASDAQ:BBBY).
Whether these companies make up part of the holdings of the ETF is not necessary a plus or minus. The point is for investors to simply take the time to understand what they're holding.
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