Launched on 05/01/2006, the iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Brokers/ Capital markets segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Brokers/ Capital markets is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
The fund is sponsored by Blackrock. It has amassed assets over $228.42 M, making it one of the average sized ETFs attempting to match the performance of the Financials - Brokers/ Capital markets segment of the equity market. IAI seeks to match the performance of the Dow Jones U.S. Select Investment Services Index before fees and expenses.
The Dow Jones U.S. Select Investment Services Index measures the performance of the investment services sector of the U.S. equity market.
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.
Annual operating expenses for this ETF are 0.43%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.48%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Goldman Sachs Group Inc (GS) accounts for about 9.92% of total assets, followed by Charles Schwab Corp (SCHW) and Cme Group Inc Class A (CME).
The top 10 holdings account for about 65.97% of total assets under management.
Performance and Risk
The ETF has gained about 7.28% so far this year and is down about -2.98% in the last one year (as of 02/12/2019). In that past 52-week period, it has traded between $52.67 and $70.28.
The ETF has a beta of 1.05 and standard deviation of 18.04% for the trailing three-year period, making it a high risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.
IShares U.S. Broker-Dealers & Securities Exchanges ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IAI is a sufficient option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
SPDR S&P Capital Markets ETF (KCE) tracks S&P Capital Markets Select Industry Index. The fund has $36.93 M in assets. KCE has an expense ratio of 0.35%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center .
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The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
SPDR S&P Capital Markets ETF (KCE): ETF Research Reports
CME Group Inc. (CME): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.