Yahoo Finance Should You Invest in the iShares U.S. Home Construction ETF (ITB)?
Looking for broad exposure to the Industrials - Engineering and Construction segment of the equity market? You should consider the iShares U.S. Home Construction ETF (ITB), a passively managed exchange traded fund launched on 05/01/2006.
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.
Investor-friendly, sector ETFs provide many options 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 1, placing it in top 6%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $2.73 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 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.
Costs
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 0.40%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.48%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 77.30% of the portfolio. Industrials and Materials round out the top three.
Looking at individual holdings, D R Horton Inc (DHI) accounts for about 14.31% of total assets, followed by Lennar A Corp (LEN) and Nvr Inc (NVR).
The top 10 holdings account for about 66.15% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Home Construction ETF has added about 2.01% so far, and was up about 41.47% over the last 12 months (as of 05/24/2024). ITB has traded between $71.40 and $115.77 in this past 52-week period.
The ETF has a beta of 1.49 and standard deviation of 29.15% 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.
Alternatives
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 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 Building & Construction ETF has $295.25 million in assets, SPDR S&P Homebuilders ETF has $1.92 billion. PKB has an expense ratio of 0.62% and XHB charges 0.35%.
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.
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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 Building & Construction ETF (PKB): ETF Research Reports
