Should You Invest in the iShares U.S. Insurance ETF (IAK)?

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

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 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $622.16 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.

Costs

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 0.40%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.42%.

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, Progressive Corp (PGR) accounts for about 14.58% of total assets, followed by Chubb Ltd (CB) and American International Group Inc (AIG).

The top 10 holdings account for about 67.26% of total assets under management.

Performance and Risk

Year-to-date, the iShares U.S. Insurance ETF return is roughly 11.37% so far, and it's up approximately 31.37% over the last 12 months (as of 04/29/2024). IAK has traded between $82.47 and $117.39 in this past 52-week period.

The ETF has a beta of 0.78 and standard deviation of 18.34% for the trailing three-year period, making it a medium risk choice in the space. With about 60 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Insurance 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, IAK 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 Property & Casualty Insurance ETF (KBWP) tracks KBW Nasdaq Property & Casualty Index and the SPDR S&P Insurance ETF (KIE) tracks S&P Insurance Select Industry Index. Invesco KBW Property & Casualty Insurance ETF has $303.99 million in assets, SPDR S&P Insurance ETF has $691.55 million. KBWP has an expense ratio of 0.35% and KIE 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. Insurance ETF (IAK): ETF Research Reports

American International Group, Inc. (AIG) : Free Stock Analysis Report

Chubb Limited (CB) : Free Stock Analysis Report

The Progressive Corporation (PGR) : Free Stock Analysis Report

SPDR S&P Insurance ETF (KIE): ETF Research Reports

Invesco KBW Property & Casualty Insurance ETF (KBWP): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.