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Should You Invest in the Invesco Dynamic Building & Construction ETF (PKB)?

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·4 min read
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If you're interested in broad exposure to the Industrials - Engineering and Construction segment of the equity market, look no further than the Invesco Dynamic Building & Construction ETF (PKB), a passively managed exchange traded fund launched on 10/26/2005.

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.

Sector ETFs are also funds of convenience, offering many 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 1, placing it in top 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $279.72 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 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 .

Costs

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 0.59%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.24%.

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 44.10% of the portfolio. Industrials and Materials round out the top three.

Looking at individual holdings, Lowe's Cos Inc (LOW) accounts for about 5.41% of total assets, followed by Dr Horton Inc (DHI) and Home Depot Inc/the (HD).

The top 10 holdings account for about 46.44% of total assets under management.

Performance and Risk

The ETF has added roughly 27.14% and is up about 99.78% so far this year and in the past one year (as of 05/03/2021), respectively. PKB has traded between $23.44 and $52.35 during this last 52-week period.

The ETF has a beta of 1.39 and standard deviation of 34.27% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PKB 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.

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 $2.09 billion in assets, iShares U.S. Home Construction ETF has $2.82 billion. XHB has an expense ratio of 0.35% and ITB charges 0.42%.

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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INVS-DYN BLDG (PKB): ETF Research Reports
 
The Home Depot, Inc. (HD) : Free Stock Analysis Report
 
Lowes Companies, Inc. (LOW) : Free Stock Analysis Report
 
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
 
SPDR-SP HOMEBLD (XHB): ETF Research Reports
 
ISHARS-US HO CO (ITB): ETF Research Reports
 
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