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Jeremy

The best homebuilders ETFs to invest in?

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Hi Jeremy,

Before the coronavirus pandemic, the housing market was on an upward trajectory with the homebuilding industry enjoying good returns, and attracting many investors into the homebuilder ETFs. 

Even now, given housing is a resilient industry, it is expected to pick up momentum once the pandemic is contained. Similarly, the low-interest-rate environment, looming entry of millennial buyers and the housing market deficit signify a great future for homebuilders ETFs.

Below are the top three homebuilders ETFs to invest in presently.

IShares U.S. Home Construction ETF

By tracking the results of the Dow Jones U.S. Select Home Construction Index, iShares U.S. Home Construction ETF gives exposure to U.S. companies manufacturing residential homes. Boosting an AUM of $1.1 billion, it is the largest ETF that tracks homebuilders. It trades in a volume of about 2.2 million shares daily and charges annual fees of 42bps. It also charges a 0.44% annual net expense ratio. 

Since the fund managed to stay strong after the 2007-2009 crisis, and have been generating high returns since then, it is expected to pick up the pace after the current market slump, thus worth investing in.

SPDR S&P Homebuilders ETF

With AUM of $811.7 million, it is the second-largest homebuilders ETF and boosts of a trading volume of about 1.8 million shares. By tracking the total return performance of its benchmark index—The S&P Homebuilders Select Industry Index—it brings exposure to the homebuilder's industry. SPDR S&P Homebuilders ETF charges annual fees of 35bps. 

Like the iShares ETF, it also bounced back after the 2007-2009 financial crisis and, hence, it’s expected to overcome the current economic standstill.

Invesco Dynamic Building & Construction ETF

With assets worth $109.1 million, the fund is the third-largest ETF and sees an average of about 15,000 shares daily. It follows the Dynamic Building & Construction Intellidex Index, where it invests about 90% of its net assets in the provided stocks. The fund also charges 0.63% in annual net expense ratio.

Invesco Dynamic Building & Construction ETF—like SPDR S&P Homebuilders ETF and iShares U.S. Home Construction ETF—also managed to stay firm after the previous crisis and will likely do the same after COVID-19 pandemic. 

 

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