Should investors playing the recovery/inflation trade by buying Materials stocks index (XLB)?
Yes, and no…
The issues with XLB is its composition became fairly defensive
1. first, it has many gold companies, – Gold is not the place to be in this recovery
2. second, it has many packaging companies – defensive names that are effectively a-cyclical
3. third, it has many housing & construction suppliers which had an enormous run on the WFH and the flight to suburbs trend
So, in short, XLB is a fairly diluted way to play this recovery…