Designed to provide broad exposure to the Financials - Regional Banks segment of the equity market, the iShares U.S. Regional Banks ETF (
IAT Quick Quote IAT - Free Report) is 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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Regional Banks is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
The fund is sponsored by Blackrock. It has amassed assets over $1.39 billion, making it one of the average sized ETFs attempting to match the performance of the Financials - Regional Banks segment of the equity market. IAT seeks to match the performance of the Dow Jones U.S. Select Regional Banks Index before fees and expenses.
The Dow Jones U.S. Select Regional Banks Index is a free-float adjusted market capitalization-weighted index which measures the performance of the regional bank sub-sector of the U.S. equity market.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.75%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Pnc Financial Services Group Inc (
PNC Quick Quote PNC - Free Report) accounts for about 13.53% of total assets, followed by Us Bancorp ( USB Quick Quote USB - Free Report) and Truist Financial Corp ( TFC Quick Quote TFC - Free Report) .
The top 10 holdings account for about 66.70% of total assets under management.
Performance and Risk
The ETF has added about 46.89% and it's up approximately 84.75% so far this year and in the past one year (as of 10/21/2021), respectively. IAT has traded between $35.19 and $65.44 during this last 52-week period.
The ETF has a beta of 1.34 and standard deviation of 39.36% for the trailing three-year period, making it a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.
IShares U.S. Regional Banks 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, IAT 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.
Invesco KBW Regional Banking ETF (
KBWR Quick Quote KBWR - Free Report) tracks KBW Nasdaq Regional Banking Index and the SPDR S&P Regional Banking ETF ( KRE Quick Quote KRE - Free Report) tracks S&P Regional Banks Select Industry Index. Invesco KBW Regional Banking ETF has $78 million in assets, SPDR S&P Regional Banking ETF has $5.43 billion. KBWR has an expense ratio of 0.35% and KRE charges 0.35%. Bottom Line
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