ETFs that focus on large-cap companies with exposure to basic materials have had nice returns for the year. Materials Select Sector SPDR (NYSEARCA:XLB) and Vanguard Materials ETF (NYSEARCA:VAW) have returned 7.5% and 8.3% respectively. Rudy Martin of The Street.com says that the U.S. economy is still growing and a growing economy needs materials.
Top companies in both of these ETFs are: Du Pont (NYSE:DD), Dow Chemical (NYSE:DOW), Alcoa (NYSE:AA), Monsanto (NYSE:MON), and Phelps Dodge (PD). Chinese demand for aluminum has helped Alcoa and recent acquisitions have pushed Phelps Dodge to the world's largest copper producer. These ETFs were not immune to the recent volatility in the markets. The question is if they will continue back on the upward trend?
VAW vs. XLB 1-yr chart: