We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Invesco Building & Construction ETF (PKB) a Strong ETF Right Now?
Read MoreHide Full Article
The Invesco Building & Construction ETF (PKB - Free Report) was launched on 10/26/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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
The fund is managed by Invesco. PKB has been able to amass assets over $241.38 million, making it one of the average sized ETFs in the Industrials ETFs. 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
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.
Operating expenses on an annual basis are 0.62% for PKB, making it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.34%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 59.10% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Materials round out the top three.
Taking into account individual holdings, Lennox International Inc (LII - Free Report) accounts for about 5.76% of the fund's total assets, followed by Nvr Inc (NVR - Free Report) and Vulcan Materials Co (VMC - Free Report) .
The top 10 holdings account for about 47.25% of total assets under management.
Performance and Risk
The ETF has lost about -3.68% and it's up approximately 48.42% so far this year and in the past one year (as of 01/04/2024), respectively. PKB has traded between $41.38 and $63.57 during this last 52-week period.
The ETF has a beta of 1.33 and standard deviation of 26.01% for the trailing three-year period, making it a high risk choice in the space. With about 31 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 $1.68 billion in assets, iShares U.S. Home Construction ETF has $2.34 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Invesco Building & Construction ETF (PKB) a Strong ETF Right Now?
The Invesco Building & Construction ETF (PKB - Free Report) was launched on 10/26/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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
The fund is managed by Invesco. PKB has been able to amass assets over $241.38 million, making it one of the average sized ETFs in the Industrials ETFs. 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
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.
Operating expenses on an annual basis are 0.62% for PKB, making it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.34%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 59.10% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Materials round out the top three.
Taking into account individual holdings, Lennox International Inc (LII - Free Report) accounts for about 5.76% of the fund's total assets, followed by Nvr Inc (NVR - Free Report) and Vulcan Materials Co (VMC - Free Report) .
The top 10 holdings account for about 47.25% of total assets under management.
Performance and Risk
The ETF has lost about -3.68% and it's up approximately 48.42% so far this year and in the past one year (as of 01/04/2024), respectively. PKB has traded between $41.38 and $63.57 during this last 52-week period.
The ETF has a beta of 1.33 and standard deviation of 26.01% for the trailing three-year period, making it a high risk choice in the space. With about 31 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 $1.68 billion in assets, iShares U.S. Home Construction ETF has $2.34 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.