Mutual funds with substantial holdings of residential construction stocks -- companies like Lennar, Pulte and Toll Brothers -- often hold stocks in other construction-related areas: general construction, housing development, home Improvement stores and materials suppliers of construction-related products. Each mutual fund holding residential construction stocks will hold different percentages of stocks in these related areas, Residential-construction related exchange traded funds (ETFs) offer additional residential-construction investment opportunities, with holdings concentrated entirely in home-building stocks.
Fidelity Select Construction and Housing (FSHOX)
Fidelity Select Construction and Housing, (FSHOX), has extensive residential construction holdings and is the only U.S. mutual fund primarily devoted to construction and housing. Among FSHOX top ten holdings are residential construction builders Toll Brothers, Lennar and Horton. Both Horton, the largest U.S home builder, and Lennar, the second-largest, build mid-market homes. Toll Brothers concentrates on the luxury home market. In addition to residential construction holdings, FSHOX holds 40 other construction and home-building related stocks, including both Home Depot and Lowe's, the two largest U.S. home-improvement stores. [Ref 1]
CGM Focus Fund
The CGM Focus Fund (CGMFX) holds a blend of value and growth stocks in larger U.S. corporations. Although the fund's diversified holdings include financial, transportation, packaging and containers, two of its top ten holdings are residential construction stocks: D.R. Horton, which comprises about 12 percent of the fund's total holdings, and Lennar, which comprises about 9 percent. Other holdings include durables related to residential development and home improvement, such as Mohawk and Whirlpool. Another fund in the same CGM funds family, LOMMX, a more aggressive, growth-oriented fund, holds similar percentages of Horton and Lennar.
Other Mutual Funds
A number of other mutual funds have more limited holdings of residential construction stocks. U.S. Global Investors All American Equity Fund (GBTFX), Wall Street Fund (WALLX) and Westcore Select (WTSLX) all hold D.R. Horton among their top 10 ten holdings. Both TCW Value Opportunities Fund Class I (TGVOX) and Turner MidCap Growth Fund Class Retirement (TMIIX) have top ten holdings of Toll Brothers. Brandywine Advisors Midcap Growth Fund (BWAFX) and two related Brandywine funds, BWAFX and BRWIX, have top ten holdings of Lennar.
Residential Construction ETFs
Investors who want to invest in residential-construction funds with greater percentages of holdings devoted to home-building may consider exchange traded funds (ETFs). Both iShares Dow Jones U.S. Home Construction Index Fund (ITB ) and SPDR S&P Homebuilders ETF are home construction index funds investing exclusively in residential building stocks. Because these funds are completely undiversified -- holding only home-construction stocks, money market funds or cash -- they will generally be more volatile than residential construction mutual funds.
- MSN Money: Fidelity Select Construction & Housing (FSHOX)
- Yahoo Finance: CGM Focus (CGMFX)
- Fund Mojo: Top 25 Mutual Funds with D.R. Horton, Inc. Common Stock (DHI) in its Top 10 Holdings
- Morningstar: Funds Holding Toll Brothers Inc
- Fund Mojo: Top 25 Mutual Funds with Lennar Corporation Class A Comm (LEN) in its Top 10 Holdings
- Index Universe: The Best ETFs For A Housing Boom
Patrick Gleeson received a doctorate in 18th century English literature at the University of Washington. He served as a professor of English at the University of Victoria and was head of freshman English at San Francisco State University. Gleeson is the director of technical publications for McClarie Group and manages an investment fund. He is a Registered Investment Advisor.