The U.S. housing market has largely recovered from the 2008/2009 housing crisis. Still, rising interest rates may eventually slow the speed of future growth. In the near term, however, higher employment levels, rising wages and limited housing supply should continue to spur demand for new homes.

Here we look at two ETFs that aim to benefit from increasing demand for U.S. housing (see the supplement on page 39 for more information).

ISHARES U.S. HOME CONSTRUCTION ETF $40 (New York symbol ITB; TSINetwork ETF Rating: Aggressive; Market cap: $1.8 billion) invests in firms that are involved in the U.S. homebuilding and improvement industry.

• Falling U.S. unemployment and rising consumer confidence continue to spur housing demand

• U.S. building permits rose 7.4% in January 2018 over January 2017

• These two U.S. homebuilding ETFs come with moderate MERs and p/e ratios

The fund holds a portfolio of 47 companies. The top 10 make up a high 61% of its total assets, and the top 5, alone, account for 46.0%. They are Lennar Corp. (13.3%), D.R. Horton (12.2%), NVR Inc. (9.2%), PulteGroup (6.8%), and Toll Brothers (5.4%). That group is followed by Home Depot (4.5%), Calatlantic Group (3.3%), Lowe’s (3.3%), Sherwin-Williams (2.3%) and Topbuild Corp. (2.1%). Funds with heavy weightings in only a few stocks carry extra risk: their overall returns can be significantly impacted if something goes wrong with one or two of their top holdings.

This ETF was launched in May 2006, and its MER is 0.44%. As a large fund, with an average $111 million in units trading hands daily, it offers strong liquidity.

Four times a year, the ETF pays a fluctuating dividend. For the previous 12 months, the annual payment of $0.122 generated a small 0.3% yield.

Still, the ETF has gained 27.9% over the last year, while the broad-based S&P 500 Index rose 19.4%.

Based on the 2018 forecast earnings for the fund’s stocks, the iShares U.S. Home Construction ETF has a p/e ratio of 14.0.

SPDR S&P HOMEBUILDERS ETF $42 (New York symbol XHB; TSINetwork ETF Rating: Aggressive; Market cap: $900.3 million) invests in companies that operate in the wider U.S. homebuilding industry.

Pure homebuilding companies make up 32% of the portfolio, while providers of home furnishings comprise 20%, construction supplies, 19%, and home-improvement businesses, 9%.

The ETF maintains equal weighting for the 34 stocks it holds in this diversified portfolio. However, equal weighting can hurt returns by limiting the contribution of the fund’s top performers if those stocks soar.

The fund’s top 10 holdings are Lowe’s Companies (5.3%), Johnson Controls (4.8%), Home Depot (4.8%), Whirlpool (4.8%), Williams-Sonoma (4.8%), Masco Corp. (4.7%), Bed Bath & Beyond (4.7%), Owens-Corning (4.6%), Toll Brothers (4.6%) and Lennar Corp. (4.6%).

The ETF started up in January 2006, and its MER is 0.35%. The fund size is reasonable at $940 million, with an average of $67 million in units changing hands daily. That provides good liquidity.

The fund pays a fluctuating quarterly dividend. For the previous 12 months, the annual payment was $0.316. That makes for a low 0.8% yield.

The units have risen 14.6% over the last year, compared to 19.4% for the broad S&P 500 Index. The ETF’s return was also below that of the ITB exchange-traded fund (see above). The modest gains are mainly because of the weak performance of Johnson Controls and Whirlpool—two of the ETF’s top holdings. It now trades at a forward p/e of 15.0.

Both of these funds are OK to hold for investors seeking direct, broad exposure to the U.S. housing market.