Homebuilders are once again very volatile, with leading ETFs in the space trading at their lowest levels since the beginning of August today.
XHB (SPDR S&P Homebuilders, Expense Ratio 0.35%) is the largest ETF play in the greater Homebuilders/Construction space, with approximately $1.45 billion in assets under management, edging out ITB (iShares
U.S. Home Construction, Expense Ratio 0.46%), which has about $1.42 billion in AUM.
In spite of price pressure in these related stocks, ITB still seems to be winning the war in terms of “losing less assets” in the form of redemptions year to date, as we see about $107 million leaving ITB year to date as compared to more than $ 343 million vacating XHB.
A much smaller fund in this space is PKB (PowerShares Dynamic Building & Construction, Expense Ratio 0.63%) which has about $108 million in AUM, which has actually added greater than $17 million YTD. It is important to note that the underlying index baskets of XHB and ITB are not at all identical, as the top five holdings in ITB are all “Homebuilders” specifically, DHI (9.79%), LEN (9.61%), PHM (9.27%), TOL (8.28%), and NVR (6.90%), while XHB’s top weightings are HD (3.73%), LOW (3.60%), WHR (3.44%), MHK (3.44%), and FBHS (3.38%).
In fact, across the top five holdings of XHB currently, none of them are “Homebuilders” to be specific, and in the top ten holdings in this fund, we see only NVR (#9) as a Homebuilder. Granted, this sector itself in reality should really be treated as “Homebuilders, Construction, and related industries if one wanted to take the specifically granular approach.
It is important to note that the sector may not settle down anytime soon with all of the aforementioned names expected to release quarterly earnings results in the near term. Options activity, which is often a good “tell” for this sector is rather slow lately in the space, which is interesting given the volatility that is present here and heavier day over day volume.
iShares U.S. Home Construction ETF
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
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