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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?
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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $293.22 million, this makes it one of the average sized ETFs in the Industrials ETFs. PKB is managed by Invesco. Before fees and expenses, PKB 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.
Operating expenses on an annual basis are 0.60% for PKB, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.22%.
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 41.10% of the portfolio. Consumer Discretionary and Materials round out the top three.
Looking at individual holdings, Home Depot Inc/the (HD - Free Report) accounts for about 5.79% of total assets, followed by Martin Marietta Materials Inc (MLM - Free Report) and Vulcan Materials Co (VMC - Free Report) .
The top 10 holdings account for about 46.42% of total assets under management.
Performance and Risk
The ETF has gained about 32.25% and is up roughly 32.79% so far this year and in the past one year (as of 12/07/2021), respectively. PKB has traded between $39.97 and $54.41 during this last 52-week period.
PKB has a beta of 1.33 and standard deviation of 34.47% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic 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 $2.19 billion in assets, iShares U.S. Home Construction ETF has $2.96 billion. XHB has an expense ratio of 0.35% and ITB charges 0.41%.
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?
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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $293.22 million, this makes it one of the average sized ETFs in the Industrials ETFs. PKB is managed by Invesco. Before fees and expenses, PKB 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.
Operating expenses on an annual basis are 0.60% for PKB, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.22%.
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 41.10% of the portfolio. Consumer Discretionary and Materials round out the top three.
Looking at individual holdings, Home Depot Inc/the (HD - Free Report) accounts for about 5.79% of total assets, followed by Martin Marietta Materials Inc (MLM - Free Report) and Vulcan Materials Co (VMC - Free Report) .
The top 10 holdings account for about 46.42% of total assets under management.
Performance and Risk
The ETF has gained about 32.25% and is up roughly 32.79% so far this year and in the past one year (as of 12/07/2021), respectively. PKB has traded between $39.97 and $54.41 during this last 52-week period.
PKB has a beta of 1.33 and standard deviation of 34.47% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic 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 $2.19 billion in assets, iShares U.S. Home Construction ETF has $2.96 billion. XHB has an expense ratio of 0.35% and ITB charges 0.41%.
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.