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Should You Invest in the iShares U.S. Financial Services ETF (IYG)?
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Designed to provide broad exposure to the Financials - Broad segment of the equity market, the iShares U.S. Financial Services ETF (IYG - Free Report) is a passively managed exchange traded fund launched on 06/12/2000.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.14 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Broad segment of the equity market. IYG seeks to match the performance of the Dow Jones U.S. Financial Services Index before fees and expenses.
The Dow Jones U.S. Financial Services Index measures the performance of the financial 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 2.12%.
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, Jpmorgan Chase & Co (JPM - Free Report) accounts for about 12.58% of total assets, followed by Visa Inc Class A (V - Free Report) and Mastercard Inc Class A (MA - Free Report) .
The top 10 holdings account for about 58.44% of total assets under management.
Performance and Risk
The ETF has lost about -0.38% and it's up approximately 10.76% so far this year and in the past one year (as of 09/27/2023), respectively. IYG has traded between $140.77 and $176.24 during this last 52-week period.
The ETF has a beta of 1.17 and standard deviation of 22.86% for the trailing three-year period, making it a high risk choice in the space. With about 105 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Financial Services ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IYG, 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.
Vanguard Financials ETF (VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $8.44 billion in assets, Financial Select Sector SPDR ETF has $30.28 billion. VFH has an expense ratio of 0.10% and XLF charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the iShares U.S. Financial Services ETF (IYG)?
Designed to provide broad exposure to the Financials - Broad segment of the equity market, the iShares U.S. Financial Services ETF (IYG - Free Report) is a passively managed exchange traded fund launched on 06/12/2000.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.14 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Broad segment of the equity market. IYG seeks to match the performance of the Dow Jones U.S. Financial Services Index before fees and expenses.
The Dow Jones U.S. Financial Services Index measures the performance of the financial 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 2.12%.
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, Jpmorgan Chase & Co (JPM - Free Report) accounts for about 12.58% of total assets, followed by Visa Inc Class A (V - Free Report) and Mastercard Inc Class A (MA - Free Report) .
The top 10 holdings account for about 58.44% of total assets under management.
Performance and Risk
The ETF has lost about -0.38% and it's up approximately 10.76% so far this year and in the past one year (as of 09/27/2023), respectively. IYG has traded between $140.77 and $176.24 during this last 52-week period.
The ETF has a beta of 1.17 and standard deviation of 22.86% for the trailing three-year period, making it a high risk choice in the space. With about 105 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Financial Services ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IYG, 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.
Vanguard Financials ETF (VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $8.44 billion in assets, Financial Select Sector SPDR ETF has $30.28 billion. VFH has an expense ratio of 0.10% and XLF charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.