While there have been winners in many corners of the space, homebuilding and construction is leading the way. The sector has been the major contributor to both earnings (+36.6%) and revenue (+21.2%) growth so far, crushing the estimates and providing a solid outlook.
Further, the continuation of the Fed’s bond buying program until the next year and low interest rates are driving the space. This is because if rates continue to decline or at least hold steady at the current levels, it would attract more buyers to the market (read: Yellen as Fed Chairwoman is Great News for These ETFs).
Thanks to these trends, the homebuilding sector has surged over the past few days, easily outpacing the broad market in the process. And with the shares of some homebuilders like PulteGroup (PHM), D.R. Horton (DHI), Lennar (LEN), Toll Brothers (TOL), Meritage Homes (MTH) and Beazer Homes (BZH) on the rise and home sales data looking upbeat of late, the outperformance could continue for this sector.
New home sales climbed to the highest level in more than two years, rising 6.4% in September. This suggests increasing consumer confidence and a strong housing recovery.
How to Play
Investors looking to gain exposure to this trend may want to take a look at the following ETFs, as these offer concentrated exposure to homebuilding and construction firms which could be not only winners this earnings season, but for months to come as well:
SPDR S&P Homebuilders ETF (XHB)
This is by far the most popular and liquid choice in the homebuilding space with AUM of over $2 billion and average daily volume of roughly 6.6 million. The fund follows the S&P Homebuilders Select Industry Index and charges 35 bps in fees a year.
In total, the product holds 37 securities with none holding more than 3.51% of total assets. Securities are nicely spread out across various market spectrums with mid cap making up for 44%, small caps comprising 43% and the rest allocated to large caps. In terms of sectors, homebuilding takes the top position at 30.82%, while building products and home furnishing retail round off to the next two spots.
The fund currently has a Zacks ETF Rank of 3 or ‘Hold’ rating with ‘Medium’ risk outlook.(...)Click here to continue reading the original ETFDailyNews.com article: The Long-Term Outlook For Homebuilder ETFs Remains BrightYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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