A sound investment process and strong management team underpin iShares US Basic Materials ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's effective investment philosophy supports a High Process Pillar rating, the result of a recent pillar upgrade from Above Average. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in volatility exposure and liquidity exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Linde

Air Products and Chemicals

Freeport-McMoRan

Ecolab

Newmont Mining

Nucor

Fastenal

Dow Inc

LyondellBasell Industries

International Flavors & Fragrances

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. iShares US Basic Materials ETF earns a High Process Pillar rating. The main driver of the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Noteworthy risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. The parent firm's five-year risk-adjusted success ratio of 57% supports the process. The measure indicates the percentage of a firm's funds that survived and surpassed their respective category's median Morningstar Risk-Adjusted Return for the period. Their impressive success ratio suggests that this firm does well for investors and that this fund may benefit from that.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the investment results of the Russell 1000 Basic Materials RIC 22.5/45 Capped Index composed of U.S. equities in the basic materials sector.  The fund generally will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. The underlying index measures the performance of the basic materials sector of the U.S. equity market. The fund is non-diversified. 

 The portfolio is overweight in basic materials by 40.7 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared to category peers are energy and consumer defensive, underweight the average by 28.0 and 3.8 percentage points of assets, respectively. The portfolio is positioned across 43 holdings and is relatively top-heavy. Of the strategy's assets, 65.2% are concentrated within the top 10 holdings, as opposed to the category’s 23.0% average. And finally, in terms of portfolio turnover, this portfolio's holdings turn over more often than comparable products in its peer group, possibly resulting in higher costs for investors and a drag on performance.

High

Process

iShares US Basic Materials ETF's strong equity team drives the strategy's Above Average People Pillar rating. There are three managers listed on the fund: Greg Savage, Paul Whitehead, Jennifer Hsui. The team is well equipped, with an average of 17 years of portfolio management experience. Together, they manage a total of 258 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares U.S. Basic Materials ETF

IYM tracks a broad, market-cap-weighted index of US basic materials companies that includes raw materials such as metals, chemicals and forestry products.

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IYM is a concentrated materials sector bet that's also not particularly cost efficient. Current supply/demand challenges in the materials sector look transitory.

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As inflation rears its ugly head, investors could look to energy and materials exchange traded funds that benefit from higher commodity prices. The energy and materials sectors are leading the S&P 500's 11 sectors in May, increasing 8% and 5.9%, respectively, compared to the broad U.S. benchmark's 0.2% dip, the Wall Street Journal reports.

Energy and Materials Sectors Leading the S&P 500

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The S&P 500 and the Dow Jones have been hovering around all-time highs lately.

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The solid trend for materials ETFs is likely to continue as Q1 earnings unfold.

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Yara International ASA

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U.S. manufacturing activity sprung up in March, marking the highest reading since December 1983.

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The iShares U.S. Basic Materials ETF (IYM) has hit a new 52-week high. Are more gains in store?

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

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PSh Shr Bsc Mat Shs

ProShares UltraShort Basic Materials

ProShares Ultra Basic Materials

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News for iShares U.S. Basic Materials ETF ETF (IYM)