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Is Invesco Dynamic Building & Construction ETF (PKB) a Strong ETF Right Now?

The Invesco Dynamic Building & Construction ETF (PKB) made its debut on 10/26/2005, and is a smart beta exchange traded fund that provides 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

PKB is managed by Invesco, and this fund has amassed over $302.21 million, which makes it one of the average sized ETFs in the Industrials ETFs. 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 .

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 0.59% for this ETF, which makes it on par with most peer products in the space.

PKB's 12-month trailing dividend yield is 0.25%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Representing 43.10% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Materials round out the top three.

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

PKB's top 10 holdings account for about 46.44% of its total assets under management.

Performance and Risk

The ETF has gained about 23.31% and is up about 77.35% so far this year and in the past one year (as of 06/14/2021), respectively. PKB has traded between $28.83 and $54.37 during this last 52-week period.

The ETF has a beta of 1.39 and standard deviation of 34.52% 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 an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

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 $1.94 billion in assets, iShares U.S. Home Construction ETF has $2.50 billion. XHB has an expense ratio of 0.35% and ITB charges 0.42%.

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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Invesco Dynamic Building & Construction ETF (PKB): ETF Research Reports
 
Lowes Companies, Inc. (LOW): Free Stock Analysis Report
 
The Home Depot, Inc. (HD): Free Stock Analysis Report
 
D.R. Horton, Inc. (DHI): Free Stock Analysis Report
 
SPDR S&P Homebuilders ETF (XHB): ETF Research Reports
 
iShares U.S. Home Construction ETF (ITB): ETF Research Reports
 
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