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Is Invesco Building & Construction ETF (PKB) a Strong ETF Right Now?
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Launched on 10/26/2005, the Invesco Building & Construction ETF (PKB - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $207.45 million, which makes 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.62% for this ETF, which makes it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.45%.
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.
Representing 56.30% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Materials round out the top three.
Taking into account individual holdings, Lennox International Inc (LII - Free Report) accounts for about 5.76% of the fund's total assets, followed by Nvr Inc (NVR - Free Report) and Vulcan Materials Co (VMC - Free Report) .
Its top 10 holdings account for approximately 47.25% of PKB's total assets under management.
Performance and Risk
The ETF return is roughly 26.23% and is up about 34.47% so far this year and in the past one year (as of 11/03/2023), respectively. PKB has traded between $38.59 and $57.21 during this last 52-week period.
The ETF has a beta of 1.30 and standard deviation of 25.90% 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 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 $1.15 billion in assets, iShares U.S. Home Construction ETF has $1.79 billion. XHB has an expense ratio of 0.35% and ITB charges 0.40%.
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 Building & Construction ETF (PKB) a Strong ETF Right Now?
Launched on 10/26/2005, the Invesco Building & Construction ETF (PKB - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $207.45 million, which makes 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.62% for this ETF, which makes it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.45%.
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.
Representing 56.30% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Materials round out the top three.
Taking into account individual holdings, Lennox International Inc (LII - Free Report) accounts for about 5.76% of the fund's total assets, followed by Nvr Inc (NVR - Free Report) and Vulcan Materials Co (VMC - Free Report) .
Its top 10 holdings account for approximately 47.25% of PKB's total assets under management.
Performance and Risk
The ETF return is roughly 26.23% and is up about 34.47% so far this year and in the past one year (as of 11/03/2023), respectively. PKB has traded between $38.59 and $57.21 during this last 52-week period.
The ETF has a beta of 1.30 and standard deviation of 25.90% 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 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 $1.15 billion in assets, iShares U.S. Home Construction ETF has $1.79 billion. XHB has an expense ratio of 0.35% and ITB charges 0.40%.
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.