DesSigned to provide broad exposure to the Industrials – Engineering and Construction segment of the equity market, the iShares US Home Construction ETF (ITB) 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.
Sector ETFs are also funds of convenience, offering many 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 13th, placing it at the bottom 19%.
The fund is sponsored by Blackrock. It has amassed assets over $ 1.52 billion, making it one of the largest 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 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. It is a free-float adjusted market capitalization-weighted index. It measures the performance of the home construction sector of the US equity market.
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.41%, making it one of the cheapest products in the space.
It has a 12-month trailing dividend yield of 0.64%.
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 Consumer Discretionary sector – about 76.70% of the portfolio. Industrials and Materials round out the top three.
Looking at individual holdings, DR Horton Inc (DHI) accounts for about 13.90% of total assets, followed by Lennar A Corp (LEN) and Nvr Inc (NVR).
The top 10 holdings account for about 63.44% of total assets under management.
Performance and Risk
So far this year, ITB has lost about -26.44%, and is down about -17.34% in the last one year (as of 04/26/2022). During this past 52-week period, the fund has traded between $ 56.84 and $ 83.04.
The ETF has a beta of 1.45 and a standard deviation of 37.93% for the trailing three-year period, making it a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
IShares US 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 an excellent option for investors seeking exposure to the Industrials ETFs market segment. There are other additional ETFs in the space that investors could consider as well.
Invesco Dynamic Building & Construction ETF (PKB) tracks Dynamic Building & Construction Intellidex Index and the SPDR S&P Homebuilders ETF (XHB) tracks S&P Homebuilders Select Industry Index. Invesco Dynamic Building & Construction ETF has $ 156.46 million in assets, SPDR S&P Homebuilders ETF has $ 1.30 billion. PKB has an expense ratio of 0.60% and XHB charges 0.35%.
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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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 ETF (PKB): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.