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U.S. Basic Materials ETF (IYM) Hits a 52-Week High

Sweta Jaiswal, FRM
·2 mins read

For investors looking for momentum, iShares U.S. Basic Materials ETF IYM is probably a suitable pick. The fund just hit a 52-week high and is up 76.8% from its 52-week low price of $59.49/share.

Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:

IYM in Focus

The fund provides exposure to U.S. companies involved with the production of raw materials, including metals, chemicals and forestry products. It has AUM of $417.1 million and charges expense ratio of 43 basis points, as stated in the prospectus.

Why the Move?

The materials sector, which is the most sensitive to global economic growth expectations, is gaining from a dovish Fed. Lower rates put pressure on the U.S. dollar that makes dollar-denominated materials cheap for foreign investors, raising demand for products that these companies sell. Also, as the sector is highly dependent on interest rates for capital expenditures, lower rates are a boon. Notably, the Federal Reserve, in its commitment to support economic recovery at the recently-concluded meeting, has decided to keep interest rates near zero. Also, improving manufacturing activities and a strengthening housing market in the United States are driving demand for materials. This is making funds like IYM an attractive investment option.

More Gains Ahead?

It seems like the fund will remain strong, with a positive weighted alpha of 16.50, which gives cues of further rally.

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iShares U.S. Basic Materials ETF (IYM): ETF Research Reports
 
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