Market Overview

HOMZ Is Where The Low Fee Is Among Homebuilders ETFs

HOMZ Is Where The Low Fee Is Among Homebuilders ETFs

Previously sunk by the March coronavirus market meltdown, homebuilder stocks and exchange-traded funds are enjoying epic resurgences.

What Happened: There are several old guard homebuilder ETFs, two of which are considered the category's legacy products, but The Hoya Capital Housing ETF (NYSE: HOMZ), the group's upstart, has something for its old rivals.

Earlier this week, Hoya Capital pared the annual expense ratio on HOMZ to 0.30%, or $30 on a $10,000 investment, from 0.45%, reminding folks that most investors love a good deal when it comes to ETF fees.

Why It's Important: The HOMZ fee cut is actually more material than meets the eye. With that reduction, HOMZ is the least expensive of the four funds in the homebuilder ETF category. To be specific, HOMZ is 12 basis points a year less expensive than the largest fund in the group, which follows the Dow Jones U.S. Select Home Construction Index.

“With the U.S. housing industry emerging as the early leader of the post-pandemic economic recovery, this fee reduction makes exposure to the critical U.S. housing industry cheaper and more accessible than ever," said Alex Pettee, president of Hoya Capital.

HOMZ, which will turn 2 years old in the first quarter of 2021, has long been a standout out in its group. While rivals focus on homebuilder or home furnishing retailers, the HOYA Capital fund does that while mixing in residential real estate investment trusts and mortgage fintech names, giving it a growthier, more encompassing approach to residential real estate.

HOMZ, which can be considered the thematic fund in its peer group, tracks the Hoya Capital Housing 100 Index and has $25.44 million in assets under management.

What's Next: Fee cuts are often good for getting new investors interested in an ETF, but what's next for HOMZ could be more upside with the fund being buoyed by rock bottom interest rates and favorable demographic trends, including increased home buying by millennials.

“As Americans are spending more time than ever in their homes, it has become clear that housing is perhaps the ultimate 'essential service,'” said Pettee. “The U.S. housing industry's resilient strength has been powered by the long-term tailwinds of favorable millennial-led demographic trends, historically low housing supply, near-record low mortgage rates, and the early signs of a post-pandemic suburban revival.”

HOMZ is up more than 10% over the past month.


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