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Is Invesco 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 Building & Construction ETF (PKB - Free Report) provides investors broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. PKB has been able to amass assets over $288.67 million, making it one of the average sized ETFs in the Industrials ETFs. PKB seeks to match the performance of the Dynamic Building & Construction Intellidex Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.62%.
PKB's 12-month trailing dividend yield is 0.29%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 39.30% of the portfolio. Consumer Discretionary and Materials round out the top three.
Taking into account individual holdings, Dr Horton Inc (DHI - Free Report) accounts for about 5.10% of the fund's total assets, followed by Pultegroup Inc (PHM - Free Report) and Lennar Corp (LEN - Free Report) .
The top 10 holdings account for about 45.13% of total assets under management.
Performance and Risk
The ETF return is roughly 12.64% and is up about 57.97% so far this year and in the past one year (as of 03/08/2024), respectively. PKB has traded between $43.43 and $71.10 during this last 52-week period.
The fund has a beta of 1.34 and standard deviation of 25.51% for the trailing three-year period, which makes PKB a high risk choice in this particular space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Building & Construction ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $1.90 billion in assets, iShares U.S. Home Construction ETF has $3.07 billion. XHB has an expense ratio of 0.35% and ITB charges 0.40%.
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 Building & Construction ETF (PKB) a Strong ETF Right Now?
Making its debut on 10/26/2005, smart beta exchange traded fund Invesco Building & Construction ETF (PKB - Free Report) provides investors broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. PKB has been able to amass assets over $288.67 million, making it one of the average sized ETFs in the Industrials ETFs. PKB seeks to match the performance of the Dynamic Building & Construction Intellidex Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.62%.
PKB's 12-month trailing dividend yield is 0.29%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 39.30% of the portfolio. Consumer Discretionary and Materials round out the top three.
Taking into account individual holdings, Dr Horton Inc (DHI - Free Report) accounts for about 5.10% of the fund's total assets, followed by Pultegroup Inc (PHM - Free Report) and Lennar Corp (LEN - Free Report) .
The top 10 holdings account for about 45.13% of total assets under management.
Performance and Risk
The ETF return is roughly 12.64% and is up about 57.97% so far this year and in the past one year (as of 03/08/2024), respectively. PKB has traded between $43.43 and $71.10 during this last 52-week period.
The fund has a beta of 1.34 and standard deviation of 25.51% for the trailing three-year period, which makes PKB a high risk choice in this particular space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Building & Construction ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $1.90 billion in assets, iShares U.S. Home Construction ETF has $3.07 billion. XHB has an expense ratio of 0.35% and ITB charges 0.40%.
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.