Exchange Traded Funds (ETFs)

Constructing a Portfolio with This Builder

The iShares U.S. Home Construction ETF (ITB) is a fund that allows investors to gain targeted exposure to the domestic home construction sector.

This exchange-traded fund (ETF) invests in a basket of home construction companies. The fund’s clear aim and simple strategy have produced positive results.

Even the broader slowdown in real estate sales has not stopped the fund’s momentum and rise to new heights. ITB’s performance over the most recent 12-month period is quite impressive, as the chart here demonstrates.

This year has served the home construction industry well, with the fund rising 49.1%, nearly four times the return shown by the S&P 500 during the same period. Year to date, ITB has posted an impressive 40.55% gain, rebounding robustly from a 26.25% decline during 2022, after gaining 49.25% in 2021, 26.38% in 2020 and 48.71% in 2019. The chart below shows the mostly consistent climb ITB has managed in the last 12 months.

Chart courtesy of StockCharts.com

This fund holds $2.4 billion in assets, and its expense ratio of 0.39% is more than balanced out by its 0.60% dividend yield.

Currently, its portfolio contains 48 companies. Among them are D.R. Horton Inc. (DHI), 14.88%; Lennar Corp. (LEN), 12.60%; NVR Inc. (NVR), 7.63%; PulteGroup Inc. (PHM), 6.95% and Lowe’s Companies Inc. (LOW), 4.58%. The bulk of the fund’s assets, 64.8%, are invested in companies in the homebuilding segment, with the rest spread among related sectors such as building products and home improvement retail. All companies included in the fund’s investments are based in the United States.

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For investors who share my belief that the homebuilding industry is a strong investment or are impressed by its recent performance and strong momentum, iShares U.S. Home Construction ETF (ITB) might offer a compelling piece to complete one’s portfolio puzzle.

I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You may just see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.