Humbled Homebuilder ETFs

ETFs like XHB (SPDR S&P Homebuilders, Expense Ratio 0.35%) and ITB (iShares U.S. Home Construction, Expense Ratio 0.48%) are both once again trading below their 200 day MA’s this morning on a rather sharp gap down.

XHB interestingly has actually pulled in greater than $260 million in new assets this week as well, bringing its assets under management above the $1.7 billion level.

YTD XHB has actually lost>$100 million in net assets, while ITB has seen about $88 million flow out. XHB edges out ITB slightly in terms of size in the “Homebuilders” category, but we remind folks that XHB is more “Homebuilders and related Industries) in terms of its look and feel, as only one of the top five holdings is a pure homebuilder (DHI at 3.20%, the fifth largest holding, behind TREX, WHR, LEG, and AOS.

ITB on the other hand has more than 44% of its assets (and these are just within the top five holdings) invested in homebuilders “pure” (LEN, DHI, PHM, TOL, and NVR are the top holdings), before we see any names that would qualify in the “related industries” category, such as HD or LOW for example, which happen to be the number six and number seven weightings in the fund.

Differences aside and illustrated, these two funds tend to move together as one might expect given the correlation between actual Homebuilders.

Observers will note exposure in XHB to manufacturers of home appliances, decks and railing, carpeting and interiors, and other sub-sectors of the greater Building and Construction realm.