For investors seeking momentum, Invesco KBW Property & Casualty Insurance ETF KBWP is probably on radar. The fund just hit a 52-week high and is up about 20% from its 52-week low price of $35.38/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:
KBWP in Focus
Invesco KBW Property & Casualty Insurance ETF provides exposure to companies primarily engaged in U.S. property and casualty insurance activities. It charges 35 bps in annual fees (see: all the Financials ETFs here).
Why the Move?
The insurance space of the broad U.S. stock market has been an area to watch, given the rise in yields. Insurance stocks are among the prime beneficiaries of a rate hike, as these are able to earn higher returns on their investment portfolio of longer-duration bonds. At the same time, these firms incur a loss as the value of longer-duration bonds goes down with rising interest rates. Nevertheless, since insurance companies have long-term investment horizons, they can hold investments until maturity and hence, no actual losses will be realized.
More Gains Ahead?
Currently, KBWP has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook, suggesting that the outperformance could continue in the months ahead. However, many spaces that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
