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Is Invesco Dynamic Building & Construction ETF (PKB) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco Dynamic Building & Construction ETF (PKB - Free Report) debuted on 10/26/2005, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Invesco, PKB has amassed assets over $239.63 million, making it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, PKB 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for PKB are 0.60%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.30%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 40.50% of the portfolio. Consumer Discretionary and Materials round out the top three.
Taking into account individual holdings, Home Depot Inc/the (HD - Free Report) accounts for about 5.79% of the fund's total assets, followed by Martin Marietta Materials Inc (MLM - Free Report) and Vulcan Materials Co (VMC - Free Report) .
The top 10 holdings account for about 46.42% of total assets under management.
Performance and Risk
The ETF has lost about -13.44% and is up roughly 2.56% so far this year and in the past one year (as of 02/08/2022), respectively. PKB has traded between $44.67 and $54.60 during this last 52-week period.
The ETF has a beta of 1.36 and standard deviation of 34.56% 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 Dynamic 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 $1.86 billion in assets, iShares U.S. Home Construction ETF has $2.37 billion. XHB has an expense ratio of 0.35% and ITB charges 0.41%.
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.
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Is Invesco Dynamic Building & Construction ETF (PKB) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco Dynamic Building & Construction ETF (PKB - Free Report) debuted on 10/26/2005, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Invesco, PKB has amassed assets over $239.63 million, making it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, PKB 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for PKB are 0.60%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.30%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 40.50% of the portfolio. Consumer Discretionary and Materials round out the top three.
Taking into account individual holdings, Home Depot Inc/the (HD - Free Report) accounts for about 5.79% of the fund's total assets, followed by Martin Marietta Materials Inc (MLM - Free Report) and Vulcan Materials Co (VMC - Free Report) .
The top 10 holdings account for about 46.42% of total assets under management.
Performance and Risk
The ETF has lost about -13.44% and is up roughly 2.56% so far this year and in the past one year (as of 02/08/2022), respectively. PKB has traded between $44.67 and $54.60 during this last 52-week period.
The ETF has a beta of 1.36 and standard deviation of 34.56% 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 Dynamic 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 $1.86 billion in assets, iShares U.S. Home Construction ETF has $2.37 billion. XHB has an expense ratio of 0.35% and ITB charges 0.41%.
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.