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U.S. Regional Banks ETF (IAT) Hits a 52-Week High

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iShares U.S. Regional Banks ETF (IAT - Free Report) is probably a suitable pick for investors looking for momentum. The fund hit a 52-week high and is up 51.9% from its 52-week low price of $45.90/share.

Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed.

IAT in Focus

The iShares U.S. Regional Banks ETF seeks to track the performance of the Dow Jones U.S. Select Regional Banks Index. It has AUM of $1.58 billion and charges an expense ratio of 41 basis points.

Why the Move?

The Federal Reserve has already started tapering bond purchases, which it expects to complete by March this year. The Fed is expected to begin raising its benchmark interest rate in March. The shift toward a tighter monetary policy will push yields higher, thereby helping the financial sector. This is because rising rates will help in boosting profits for banks, insurance companies, discount brokerage firms and asset managers.

The steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a chunk of banks’ revenues, is likely to receive support from the steepening of the yield curve and a modest rise in loan demand. This is making funds like IAT an impressive investment option.

More Gains Ahead?

It seems like the iShares U.S. Regional Banks ETF will remain strong, with a positive weighted alpha of 38.87, which gives cues of a further rally.


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