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The iShares U.S. Basic Materials ETF (IYM) was launched on 06/12/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $824.30 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. IYM seeks to match the performance of the Dow Jones U.S. Basic Materials Index before fees and expenses.
The Russell 1000 Basic Materials RIC 22.5/45 Capped Gross Index measures the performance of the basic materials sector of the U.S. equity market.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.39%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.20%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 94.20% of the portfolio.
Looking at individual holdings, Linde Plc (LIN) accounts for about 19.29% of total assets, followed by Air Products And Chemicals Inc (APD) and Freeport Mcmoran Inc (FCX).
The top 10 holdings account for about 60.08% of total assets under management.
Performance and Risk
The ETF has lost about -18.48% so far this year and is down about -7.90% in the last one year (as of 09/23/2022). In that past 52-week period, it has traded between $111.64 and $154.02.
The ETF has a beta of 1.13 and standard deviation of 28.36% for the trailing three-year period, making it a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.