Launched on 05/01/2006, the iShares U.S. Home Construction ETF (ITB) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials – Engineering and Construction segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient 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 13, placing it in bottom 19%.
The fund is sponsored by Blackrock. It has amassed assets over $1.29 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.
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.41%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.78%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation in the Consumer Discretionary sector–about 77.50% of the portfolio. Industrials and Materials round out the top three.
Looking at individual holdings, D R 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
Year-to-date, the iShares U.S. Home Construction ETF has lost about -34.79% so far, and is down about -23.06% over the last 12 months (as of 06/29/2022). ITB has traded between $49.13 and $83.04 in this past 52-week period.
The ETF has a beta of 1.37 and standard deviation of 39.16% 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 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 good 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) 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 $117.50 million in assets, SPDR S&P Homebuilders ETF has $1.03 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 U.S. Home Construction ETF (ITB): ETF Research Reports
Lennar Corporation (LEN): Free Stock Analysis Report
D.R. 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.