“The homebuilders segment accounts for 29% of XHB’s total assets and is this ETF’s biggest industry weighting. Other significant weightings include the building-products manufacturers segment (26.5% of fund assets), home-furnishing retailers (17%), home-furnishing companies (12%), home-improvement retailers (9%), and household appliance makers (6.3%),” he added. “This fund holds 35 companies, and holdings are initially equal-weighted and then weights are adjusted to ensure liquidity and concentration requirements.”
ITB holds assets of $867.8 million and charges an expense ratio of 0.47%.
XHB is larger with $1.4 billion in assets and also has lower fees of 0.35%.
“Despite some obvious differences between the two funds, the performance of XHB and ITB is 98% correlated over the past five years,” Goldsborough noted.
Speculative homebuilder stocks have rallied sharply this year on hopes the battered housing market is finally on the mend. For example, Standard Pacific Corp. and PulteGroup are up 103% and 77% year to date, respectively, according to Morningstar. [Biotech, Homebuilder ETFs in Multiyear Breakouts]
iShares Dow Jones US Home Construction
