Looking for broad exposure to the Industrials – Engineering and Construction segment of the equity market? You should consider the Invesco Dynamic Building & Construction ETF (PKB), a passively managed exchange traded fund launched on 10/26/2005.
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.
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 2, placing it in top 13%.
The fund is sponsored by Invesco. It has amassed assets over $201.33 million, making it one of the average sized ETFs attempting to match the performance of the Industrials – Engineering and Construction segment of the equity market. PKB seeks to match the performance of the Dynamic Building & Construction Intellidex Index before fees and expenses.
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.
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 0.57%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.41%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. 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 64.10% of the portfolio. Industrials and Materials round out the top three.
Looking at individual holdings, Pultegroup Inc (PHM) accounts for about 5.32% of total assets, followed by Nvr Inc (NVR) and Lennar Corp (LEN).
The top 10 holdings account for about 45.95% of total assets under management.
Performance and Risk
The ETF has added roughly 18.41% so far this year and is up about 13.08% in the last one year (as of 06/05/2023). In that past 52-week period, it has traded between $35.54 and $48.84.
The ETF has a beta of 1.26 and standard deviation of 26.92% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Invesco Dynamic Building & Construction ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. PKB, then, is not a suitable option for investors seeking exposure to the Industrials ETFs segment of the market. Instead, there are better ETFs in the space to consider.
SPDR S&P Homebuilders ETF (XHB) tracks S&P Homebuilders Select Industry Index and the iShares U.S. Home Construction ETF (ITB) tracks Dow Jones U.S. Select Home Construction Index. SPDR S&P Homebuilders ETF has $1.07 billion in assets, iShares U.S. Home Construction ETF has $1.90 billion. XHB has an expense ratio of 0.35% and ITB charges 0.39%.
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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