Is Invesco Building & Construction ETF (PKB) a Strong ETF Right Now?

The Invesco Building & Construction ETF (PKB) made its debut on 10/26/2005, and is a smart beta exchange traded fund that provides broad exposure to the Industrials ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by Invesco. PKB has been able to amass assets over $289.99 million, making it one of the average sized ETFs in the Industrials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Building & Construction Intellidex Index.

The Dynamic Building & Construction Intellidex Index is comprised of stocks of U.S. building and construction companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.57% for PKB, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 0.13%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

This ETF has heaviest allocation in the Industrials sector - about 55% of the portfolio. Materials and Consumer Discretionary round out the top three.

Looking at individual holdings, Home Depot Inc/the (HD) accounts for about 5.17% of total assets, followed by Emcor Group Inc (EME) and Vulcan Materials Co (VMC).

PKB's top 10 holdings account for about 46.01% of its total assets under management.

Performance and Risk

So far this year, PKB return is roughly 22.22%, and was up about 18.69% in the last one year (as of 09/26/2025). During this past 52-week period, the fund has traded between $62.05 and $95.34.

The ETF has a beta of 1.27 and standard deviation of 25.15% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers .

Alternatives

Invesco Building & Construction ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

SPDR S&P Homebuilders ETF(XHB) tracks S&P Homebuilders Select Industry Index The fund has $1.85 billion in assets. XHB has an expense ratio of 0.35%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs

Bottom Line

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This article originally published on Zacks Investment Research (zacks.com).

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