Launched on 05/01/2006, the iShares U.S. Insurance ETF (
IAK Quick Quote IAK - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Insurance segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Insurance 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 $330.80 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Insurance segment of the equity market. IAK seeks to match the performance of the Dow Jones U.S. Select Insurance Index before fees and expenses.
The Dow Jones U.S. Select Insurance Index includes companies providing a range of specialized financial services, including securities brokers & dealers, online brokers & securities or commodities exchanges.
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 0.42%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.95%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. 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, Chubb Ltd (
CB Quick Quote CB - Free Report) accounts for about 11.90% of total assets, followed by Progressive Corp ( PGR Quick Quote PGR - Free Report) and Metlife Inc ( MET Quick Quote MET - Free Report) .
The top 10 holdings account for about 61.52% of total assets under management.
Performance and Risk
The ETF has lost about -1.49% so far this year and it's up approximately 6.62% in the last one year (as of 08/08/2022). In that past 52-week period, it has traded between $77.61 and $92.57.
The ETF has a beta of 0.86 and standard deviation of 29.32% for the trailing three-year period, making it a medium risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.
IShares U.S. Insurance 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, IAK 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 Property & Casualty Insurance ETF (
KBWP Quick Quote KBWP - Free Report) tracks KBW Nasdaq Property & Casualty Index and the SPDR S&P Insurance ETF ( KIE Quick Quote KIE - Free Report) tracks S&P Insurance Select Industry Index. Invesco KBW Property & Casualty Insurance ETF has $199.42 million in assets, SPDR S&P Insurance ETF has $511.90 million. KBWP has an expense ratio of 0.35% and KIE charges 0.35%. Bottom Line
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Zacks ETF Center.