The iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) was launched on 05/01/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Brokers/ Capital markets segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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 5, placing it in top 31%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $2.15 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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%.
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 14.61% of total assets, followed by S&p Global Inc (SPGI) and Morgan Stanley (MS).
The top 10 holdings account for about 70.77% of total assets under management.
Performance and Risk
So far this year, IAI has added about 5.13%, and was up about 45.97% in the last one year (as of 01/21/2025). During this past 52-week period, the fund has traded between $105.04 and $153.58.
The ETF has a beta of 1.14 and standard deviation of 20.64% for the trailing three-year period, making it a high risk choice in the space. With about 39 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 a suitable option for investors seeking exposure to the Financials ETFs segment of the market. Instead, 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 $548.48 million in assets. KCE has an expense ratio of 0.35%.
Bottom Line
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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
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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.
