Subscribe to Entrepreneur for $5
Subscribe

Should You Invest in the iShares U.S. Regional Banks ETF (IAT)?

Sector ETF report for IAT

By
This story originally appeared on Zacks

Designed to provide broad exposure to the Financials - Regional Banks segment of the equity market, the iShares U.S. Regional Banks ETF (IAT) is a passively managed exchange traded fund launched on 05/01/2006.

- Zacks

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%.

Index Details

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.

Costs

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) accounts for about 13.53% of total assets, followed by Us Bancorp (USB) and Truist Financial Corp (TFC).

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.

Alternatives

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) tracks KBW Nasdaq Regional Banking Index and the SPDR S&P Regional Banking ETF (KRE) 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

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.



Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

iShares U.S. Regional Banks ETF (IAT): ETF Research Reports

 

The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report

 

U.S. Bancorp (USB): Free Stock Analysis Report

 

SPDR S&P Regional Banking ETF (KRE): ETF Research Reports

 

Invesco KBW Regional Banking ETF (KBWR): ETF Research Reports

 

Truist Financial Corporation (TFC): Free Stock Analysis Report

 

To read this article on Zacks.com click here.