The U.S. housing market has been hard hit coming off the financial crisis, but cautiously optimistic investors are beginning to venture back into homebuilder exchange traded funds.
The iShares Dow Jones U.S. Home Construction ETF (NYSEArca: ITB) is up 19.2% year-to-date. The fund allocates 64% of its weighting to the home construction sector, followed by 20% in building materials, 10.9% in home improvement retailers and 4.9% in furnishings. ITB has an expense ratio of 0.47%. [ETF Chart of the Day: Homebuilders]
The SPDR S&P Homebuilders ETF (NYSEArca: XHB) is up 20.2% year-to-date. The fund has a more diversified weighting, with sub-sector allocations including building products 26.3%, homebuilding 26.1%, home furnishing retail 17.7%, home furnishings 13.6%, home improvement retail 9.1 and household appliances 7.2%. XHB has an expense ratio of 0.35%.
The ITB ETF may be better suited for those who believe homebuilder stocks will benefit the most from the improving investor sentiment, but XHB may be better for those who remain less optimistic and believe the housing market may stumble, writes David Sterman for Financial Advisor. [Homebuilders Lead Sector ETFs with 26% Advance]
Exiting home sales hit 4.6 million in February, a five-year high. Looking ahead, the March numbers, which are due out on April 19, may have been boosted by the unseasonably warmer weather.