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Is Invesco Dynamic Building & Construction ETF (PKB) a Strong ETF Right Now?
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Making its debut on 10/26/2005, smart beta exchange traded fund Invesco Dynamic Building & Construction ETF (PKB - Free Report) provides investors 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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
Because the fund has amassed over $245.28 million, this makes it one of the average sized ETFs in the Industrials ETFs. PKB is managed by Invesco. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Building & Construction Intellidex Index.
The Dynamic Building & Construction Intellidex 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.57% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.44%.
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 Consumer Discretionary sector, which is about 60.10% of the portfolio. Its Industrials and Materials round out the top three.
Looking at individual holdings, Pultegroup Inc (PHM - Free Report) accounts for about 5.06% of total assets, followed by Dr Horton Inc (DHI - Free Report) and Martin Marietta Materials Inc (MLM - Free Report) .
The top 10 holdings account for about 42.22% of total assets under management.
Performance and Risk
So far this year, PKB return is roughly 30.38%, and it's up approximately 23.95% in the last one year (as of 08/22/2023). During this past 52-week period, the fund has traded between $36.54 and $57.21.
PKB has a beta of 1.30 and standard deviation of 26.02% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 32 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 $1.32 billion in assets, iShares U.S. Home Construction ETF has $2.25 billion. XHB has an expense ratio of 0.35% and ITB charges 0.39%.
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?
Making its debut on 10/26/2005, smart beta exchange traded fund Invesco Dynamic Building & Construction ETF (PKB - Free Report) provides investors 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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
Because the fund has amassed over $245.28 million, this makes it one of the average sized ETFs in the Industrials ETFs. PKB is managed by Invesco. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Building & Construction Intellidex Index.
The Dynamic Building & Construction Intellidex 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.57% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.44%.
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 Consumer Discretionary sector, which is about 60.10% of the portfolio. Its Industrials and Materials round out the top three.
Looking at individual holdings, Pultegroup Inc (PHM - Free Report) accounts for about 5.06% of total assets, followed by Dr Horton Inc (DHI - Free Report) and Martin Marietta Materials Inc (MLM - Free Report) .
The top 10 holdings account for about 42.22% of total assets under management.
Performance and Risk
So far this year, PKB return is roughly 30.38%, and it's up approximately 23.95% in the last one year (as of 08/22/2023). During this past 52-week period, the fund has traded between $36.54 and $57.21.
PKB has a beta of 1.30 and standard deviation of 26.02% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 32 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 $1.32 billion in assets, iShares U.S. Home Construction ETF has $2.25 billion. XHB has an expense ratio of 0.35% and ITB charges 0.39%.
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.