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ETF Specialist

Parsing Homebuilder ETFs

Two homebuilder ETFs with similar labels but very different subindustry exposures.

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Over the years, exchange-traded funds have been lauded for their transparency and simplicity. For the most part, that's still true. Of course, as more and more ''exotic" products are introduced, the "know what you own" mantra rings even truer. But no matter the ETF, it always pays to look beyond the label.

Even some older, traditional index-based equity ETFs have undergone changes in their index composition over time that have altered the subindustry exposures they offer. Take, for instance, a couple of the homebuilder ETFs. Some may be surprised at how the allocations to actual homebuilders can vary so widely by similarly named funds.

John Gabriel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.