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.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. 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 $1.07 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 2.21%.
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, Pnc Financial Services Group Inc (
PNC Quick Quote PNC - Free Report) accounts for about 12.71% of total assets, followed by Truist Financial Corp ( TFC Quick Quote TFC - Free Report) and Us Bancorp ( USB Quick Quote USB - Free Report) .
The top 10 holdings account for about 64.02% of total assets under management.
Performance and Risk
The ETF has lost about -11.40% so far this year and is down about -2.14% in the last one year (as of 04/26/2022). In that past 52-week period, it has traded between $53.73 and $69.28.
The ETF has a beta of 1.21 and standard deviation of 40.15% 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 holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IAT is an outstanding option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
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 $83.53 million in assets, SPDR S&P Regional Banking ETF has $4.54 billion. KBWR has an expense ratio of 0.35% and KRE charges 0.35%. Bottom Line
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