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ETF Specialist

A Targeted Way to Home in on Housing

This ETF holds mostly homebuilders but includes some housing-related subsectors as well.

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Investors seeking exposure to the housing sector can consider the sector-specific exchange-traded fund  iShares U.S. Home Construction (ITB). This ETF holds stocks across the market-cap spectrum and defines the homebuilding segment broadly to include companies from other industries, such as building products, home furnishings, and home-improvement retailers. Because this ETF is a concentrated bet on a very narrow segment of the market, this fund is suitable only as a complementary satellite holding in a diversified portfolio. The housing sector is highly cyclical and sensitive to economic and credit conditions.

The homebuilders segment accounts for almost 63% of ITB's total assets and is this ETF's biggest industry weighting. Other significant weightings include building-materials and fixtures producers (15.8%), home-improvement retailers (9.6%), and furniture companies (4.3%). This fund contains 41 companies and is top-heavy, with the top 10 holdings accounting for 63% of total assets. With an average market cap of $6.7 billion, this fund has a mid-cap tilt.

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

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