Designed to provide broad exposure to the Industrials - Engineering and Construction segment of the equity market, the iShares U.S. Home Construction ETF (
ITB Quick Quote ITB - Free Report) is a passively managed exchange traded fund launched on 05/01/2006.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Engineering and Construction is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
The fund is sponsored by Blackrock. It has amassed assets over $2.40 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Engineering and Construction segment of the equity market. ITB seeks to match the performance of the Dow Jones U.S. Select Home Construction Index before fees and expenses.
The Dow Jones U.S. Select Home Builders Index is a subset of the Dow Jones U.S. Household Goods Index.The Index is a free-float adjusted market capitalization-weighted index. The Index measures the performance of the home construction sector of the U.S. equity market. The Index includes companies that are constructors of residential homes, including manufacturers of mobile and prefabricated homes.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.45%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 78.20% of the portfolio. Industrials and Materials round out the top three.
Looking at individual holdings, D R Horton Inc (
DHI Quick Quote DHI - Free Report) accounts for about 14.38% of total assets, followed by Lennar A Corp ( LEN Quick Quote LEN - Free Report) and Nvr Inc ( NVR Quick Quote NVR - Free Report) .
The top 10 holdings account for about 64.81% of total assets under management.
Performance and Risk
The ETF has gained about 28.47% so far this year and was up about 21.44% in the last one year (as of 10/20/2021). In that past 52-week period, it has traded between $51.98 and $77.09.
The ETF has a beta of 1.45 and standard deviation of 36.91% for the trailing three-year period, making it a high risk choice in the space. With about 48 holdings, it has more concentrated exposure than peers.
IShares U.S. Home Construction ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, ITB is a great option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco Dynamic Building & Construction ETF (
PKB Quick Quote PKB - Free Report) tracks Dynamic Building & Construction Intellidex Index and the SPDR S&P Homebuilders ETF ( XHB Quick Quote XHB - Free Report) tracks S&P Homebuilders Select Industry Index. Invesco Dynamic Building & Construction ETF has $277.39 million in assets, SPDR S&P Homebuilders ETF has $1.80 billion. PKB has an expense ratio of 0.59% and XHB charges 0.35%. Bottom Line
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Zacks ETF Center.