Yahoo Finance Should You Invest in the iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI)?
If you're interested in broad exposure to the Financials - Brokers/ Capital markets segment of the equity market, look no further than the iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI), a passively managed exchange traded fund launched on 05/01/2006.
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.
Sector ETFs are also funds of convenience, offering many 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 10, placing it in bottom 38%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.11 billion, making it one of the larger 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.
Costs
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 0.40%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.61%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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, S&p Global Inc (SPGI) accounts for about 13.74% of total assets, followed by Goldman Sachs Group Inc (GS) and Morgan Stanley (MS).
The top 10 holdings account for about 71.10% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Broker-Dealers & Securities Exchanges ETF has gained about 7.63% so far, and is up roughly 35.35% over the last 12 months (as of 05/13/2024). IAI has traded between $85.18 and $116.72 in this past 52-week period.
The ETF has a beta of 1.11 and standard deviation of 20.92% for the trailing three-year period, making it a high risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
IShares U.S. Broker-Dealers & Securities Exchanges ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IAI, then, is not the best option for investors seeking exposure to the Financials ETFs segment of the market. However, there are better ETFs in the space to consider.
SPDR S&P Capital Markets ETF (KCE) tracks S&P Capital Markets Select Industry Index. The fund has $221.06 million in assets. KCE has an expense ratio of 0.35%.
Bottom Line
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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iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI): ETF Research Reports
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
Morgan Stanley (MS) : Free Stock Analysis Report
SPDR S&P Capital Markets ETF (KCE): ETF Research Reports
S&P Global Inc. (SPGI) : Free Stock Analysis Report
