Additionally, other top weightings in the index include names such as USG Corporation (NYSE: USG), Bed Bath & Beyond Inc. (NasdaqGS: BBBY), The Home Depot, Inc. (NYSE: HD), Lowe’s Companies Inc. (NYSE: LOW), and others that are certainly not “homebuilders.” XHB may be more of a play on retailers based on its underlying index makeup, more so than a way to gain true exposure to homebuilders.
For those who truly want to isolate firms that are directly involved in the manufacture of homes, iShares offers iShares Dow Jones U.S. Home Construction Index Fund (NYSEArca: ITB). The top five holdings, Lennar Corp. (NYSE: LEN) (10.23%), DR Horton Inc. (NYSE: DHI) (9.46%), Toll Brothers Inc. (NYSE: TOL) (8.18%), NVR Inc. (NYSE: NVR) (8.12%), and PulteGroup, Inc. (NYSE: PHM) (8.02%), are all truly homebuilders, and collectively make up 35% of the total index. There are some “non-homebuilders” in the index, including HD and LOW for example, but the makeup of the index on the whole is much more tilted towards the pure homebuilders than XHB. [Best ETFs for Homebuilders]
iShares Dow Jones U.S. Home Construction Index Fund
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