Materials Sector Equity

Materials mutual funds and ETFs primarily invest in both basic and precious... Materials mutual funds and ETFs primarily invest in both basic and precious materials stocks. Basic materials stocks are defined as companies that manufacture chemicals, paper/forestry products, metals, steel and other minerals. Precious metal stocks involve mining and trading of gold, silver, and platinum among others. These funds can be actively or passively managed and may, depending on their mandate, invest in small, mid, or large capitalization stocks. Materials mutual funds and ETFs may be attractive for investors who are bullish on a particular natural resource. An investor who is bullish on the lumber industry, for example, may own a fund that has a significant allocation to companies involved in the forestry sector. Likewise, many investors purchase materials funds that own shares of mining companies. Materials stocks can do quite well if a given sector is experiencing a boom. However, the materials industry is very cyclical, and commodity prices often decline significantly following large bull markets. The industry is also impacted by a range of other factors, such as growth in developing market economies, central bank policies, the level of inventories, and financial speculation. As a result, these funds are often considered a bit aggressive and aren’t generally suitable for very conservative investors. Having said that, they can be a great way to diversify a portfolio if carefully invested. Last Updated: 12/01/2023 View more View less

Materials mutual funds and ETFs primarily invest in both basic and precious materials stocks. Basic materials stocks are defined as companies that manufacture chemicals, paper/forestry products, metals, steel and other minerals. Precious metal... Materials mutual funds and ETFs primarily invest in both basic and precious materials stocks. Basic materials stocks are defined as companies that manufacture chemicals, paper/forestry products, metals, steel and other minerals. Precious metal stocks involve mining and trading of gold, silver, and platinum among others. These funds can be actively or passively managed and may, depending on their mandate, invest in small, mid, or large capitalization stocks. Materials mutual funds and ETFs may be attractive for investors who are bullish on a particular natural resource. An investor who is bullish on the lumber industry, for example, may own a fund that has a significant allocation to companies involved in the forestry sector. Likewise, many investors purchase materials funds that own shares of mining companies. Materials stocks can do quite well if a given sector is experiencing a boom. However, the materials industry is very cyclical, and commodity prices often decline significantly following large bull markets. The industry is also impacted by a range of other factors, such as growth in developing market economies, central bank policies, the level of inventories, and financial speculation. As a result, these funds are often considered a bit aggressive and aren’t generally suitable for very conservative investors. Having said that, they can be a great way to diversify a portfolio if carefully invested. Last Updated: 12/01/2023 View more View less