Launched on 05/01/2006, the iShares U.S. Home Construction ETF (
ITB Quick Quote ITB - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Engineering and Construction segment of the equity market.
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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Engineering and Construction is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
The fund is sponsored by Blackrock. It has amassed assets over $1.30 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. It is a free-float adjusted market capitalization-weighted index. It measures the performance of the home construction sector of the U.S. equity market.
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 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.71%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 77.60% 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 14.66% 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 65.07% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Home Construction ETF has lost about -28.23% so far, and is down about -20.06% over the last 12 months (as of 08/29/2022). ITB has traded between $49.13 and $83.04 in this past 52-week period.
The ETF has a beta of 1.40 and standard deviation of 39.42% for the trailing three-year period, making it a high risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
IShares U.S. Home Construction ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, ITB is a reasonable option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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 $123.87 million in assets, SPDR S&P Homebuilders ETF has $1 billion. PKB has an expense ratio of 0.60% and XHB charges 0.35%. Bottom Line
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