Should you invest in the iShares US Home Construction ETF (ITB)?

Designed to provide broad exposure to the Industry – Engineering and Construction segment of the equity market, the iShares US Home Construction ETF (ITB) is a passively managed exchange-traded fund launched on 01/05/2006.

Although they are 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. .

In addition, sector ETFs provide convenient ways to gain diversified, low-risk exposure to a broad group of companies in particular sectors. Industries – Engineering and Construction is one of the 16 major Zacks sectors in the Zacks Industry classification. He is currently ranked 9, putting him in the bottom 44%.

Index Details

The fund is sponsored by Blackrock. It has amassed over $ 2.40 billion in assets, making it one of the largest ETFs attempting to match the performance of the Industry – Engineering and Construction segment of the equity market. ITB seeks to match the performance of the Dow Jones US Select Home Construction Index before fees and expenses.

The Dow Jones US Select Home Builders Index is a subset of the Dow Jones US Household Goods Index. The index is a free float-adjusted market capitalization weighted index. The index measures the performance of the residential construction sector on the US stock market. The index includes companies that are residential home builders, including manufacturers of mobile and manufactured homes.

Costs

Cost is a big factor in selecting the right ETF, and cheaper funds can dramatically outperform their more expensive counterparts if all other fundamentals are the same.

The annual operating expenses of this ETF are 0.41%, which makes it comparable to that of most peer products in space.

It has a 12 month rolling dividend yield of 0.45%.

Sector exposure and main stocks

It is important to delve into the holdings of an ETF before investing despite the many advantages of these types of funds, such as diversified exposure, which minimizes the risk associated with individual stocks. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the highest allocation in the consumer discretionary sector – around 78.20% of the portfolio. Industrial products and materials round out the top three.

When it comes to individual holdings, DR Horton Inc (DHI) accounts for approximately 14.38% of total assets, followed by Lennar A Corp (LEN) and Nvr Inc (NVR).

The top 10 holdings represent approximately 64.81% of total assets under management.

Return and risk

The ETF has gained around 28.47% so far this year and has risen around 21.44% in the last year (as of 10/20/2021). Over the past 52 weeks, it has traded between $ 51.98 and $ 77.09.

The ETF has a beta of 1.45 and a standard deviation of 36.91% for the three-year period, making it a high-risk choice in the space. With around 48 positions, he has more concentrated exposure than his peers.

Alternatives

IShares US Home Construction ETF holds a Zacks ETF ranking of 2 (Buy), which is based on the expected return of the asset class, expense ratio and momentum, among other factors. For this reason, ITB is a great option for investors looking for exposure to the industrial ETF segment of the market. There are other additional ETFs in the space that investors might want to consider as well.

The Invesco Dynamic Building & Construction ETF (PKB) tracks the Dynamic Building & Construction Intellidex Index and the SPDR S&P Homebuilders ETF (XHB) tracks the S&P Homebuilders Select Industry Index. The Invesco Dynamic Building & Construction ETF has $ 277.39 million in assets, the SPDR S&P Homebuilders ETF has $ 1.80 billion. PKB has an expense ratio of 0.59% and XHB charges 0.35%.

Final result

To learn more about this and other ETFs, search for products that match your investment goals, and read articles on the latest developments in the ETF investing world, please visit the Zacks ETF Center.

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

IShares US Home Construction ETF (ITB): ETF Research Reports

Lennar Corporation (LEN): Free Stock Analysis Report

DR Horton, Inc. (DHI): Free Stock Analysis Report

NVR, Inc. (NVR): Free Stock Analysis Report

SPDR S&P Homebuilders ETF (XHB): ETF Research Reports

Invesco Dynamic Building & Construction (PKB) ETFs: ETF Research Reports

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