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Is Invesco Dynamic Building & Construction ETF (PKB) a Strong ETF Right Now?
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The Invesco Dynamic Building & Construction ETF (PKB - Free Report) was launched on 10/26/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PKB has been able to amass assets over $283.15 million, making it one of the average sized ETFs in the Industrials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Building & Construction Intellidex Index.
The index is comprised of stocks of U.S. building and construction companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors
.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for PKB are 0.59%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.25%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
PKB's heaviest allocation is in the Industrials sector, which is about 37.50% of the portfolio. Its Consumer Discretionary and Materials round out the top three.
Looking at individual holdings, Johnson Controls International Plc (JCI - Free Report) accounts for about 5.67% of total assets, followed by Trane Technologies Plc (TT - Free Report) and Lowe's Cos Inc (LOW - Free Report) .
The top 10 holdings account for about 47% of total assets under management.
Performance and Risk
The ETF has added roughly 22.07% and is up about 50.81% so far this year and in the past one year (as of 07/22/2021), respectively. PKB has traded between $33.11 and $54.37 during this last 52-week period.
The fund has a beta of 1.38 and standard deviation of 34.69% for the trailing three-year period, which makes PKB a high risk choice in this particular space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Building & Construction ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
SPDR S&P Homebuilders ETF (XHB - Free Report) tracks S&P Homebuilders Select Industry Index and the iShares U.S. Home Construction ETF (ITB - Free Report) tracks Dow Jones U.S. Select Home Construction Index. SPDR S&P Homebuilders ETF has $1.77 billion in assets, iShares U.S. Home Construction ETF has $2.26 billion. XHB has an expense ratio of 0.35% and ITB charges 0.42%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Invesco Dynamic Building & Construction ETF (PKB) a Strong ETF Right Now?
The Invesco Dynamic Building & Construction ETF (PKB - Free Report) was launched on 10/26/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PKB has been able to amass assets over $283.15 million, making it one of the average sized ETFs in the Industrials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Building & Construction Intellidex Index.
The index is comprised of stocks of U.S. building and construction companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors .
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for PKB are 0.59%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.25%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
PKB's heaviest allocation is in the Industrials sector, which is about 37.50% of the portfolio. Its Consumer Discretionary and Materials round out the top three.
Looking at individual holdings, Johnson Controls International Plc (JCI - Free Report) accounts for about 5.67% of total assets, followed by Trane Technologies Plc (TT - Free Report) and Lowe's Cos Inc (LOW - Free Report) .
The top 10 holdings account for about 47% of total assets under management.
Performance and Risk
The ETF has added roughly 22.07% and is up about 50.81% so far this year and in the past one year (as of 07/22/2021), respectively. PKB has traded between $33.11 and $54.37 during this last 52-week period.
The fund has a beta of 1.38 and standard deviation of 34.69% for the trailing three-year period, which makes PKB a high risk choice in this particular space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Building & Construction ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
SPDR S&P Homebuilders ETF (XHB - Free Report) tracks S&P Homebuilders Select Industry Index and the iShares U.S. Home Construction ETF (ITB - Free Report) tracks Dow Jones U.S. Select Home Construction Index. SPDR S&P Homebuilders ETF has $1.77 billion in assets, iShares U.S. Home Construction ETF has $2.26 billion. XHB has an expense ratio of 0.35% and ITB charges 0.42%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.