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

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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.

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.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Engineering and Construction is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $283.08 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

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 counterparts, other things remaining the same.

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 0.23%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 37.80% of the portfolio. Industrials and Materials round out the top three.

Looking at individual holdings, Johnson Controls International Plc (JCI) accounts for about 5.67% of total assets, followed by Trane Technologies Plc (TT) and Lowe's Cos Inc (LOW).

The top 10 holdings account for about 47% of total assets under management.

Performance and Risk

The ETF has added roughly 26.77% and was up about 36.21% so far this year and in the past one year (as of 11/04/2021), respectively. PKB has traded between $36.70 and $54.37 during this last 52-week period.

The ETF has a beta of 1.35 and standard deviation of 34.56% for the trailing three-year period, making it a high risk choice in the space. With about 30 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 good 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 $2.05 billion in assets, iShares U.S. Home Construction ETF has $2.74 billion. XHB has an expense ratio of 0.35% and ITB charges 0.41%.

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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Invesco Dynamic Building & Construction ETF (PKB): ETF Research Reports
 
Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report
 
SPDR S&P Homebuilders ETF (XHB): ETF Research Reports
 
iShares U.S. Home Construction ETF (ITB): ETF Research Reports
 
Trane Technologies plc (TT) : Free Stock Analysis Report
 
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