Advertisement
investing

Ride the Bull Market With This ETF Filled With Brokerage Stocks

These stocks are less sensitive to interest-rate swings than most financials.

Five years after the depths of the financial crisis—which was marked by, among other things, the demise of Bear Stearns and Lehman Brothers—the brokerage industry has recovered smartly. That’s been a boon for investors in this segment of the financial sector, especially over the past year.

That brokerage stocks star in a bull market should come as no surprise. When share prices rise, investors become more confident and tend to trade more, boosting brokers’ revenues. Moreover, corporate America’s massive cash piles should lead to more mergers and buyouts, which in turn should boost investment banks, says S&P Capital IQ analyst Ken Leon.

Advertisement - Article continues below

iShares U.S. Broker-Dealers ETF (symbol IAI) holds stocks of 21 brokers and investment-banking concerns. The list includes both online brokers, such as E-Trade, and full-service brokers, such as Raymond James, as well as exchanges and market specialists, such as NYSE Euronext and KCG Holdings. The ETF’s biggest holdings, Goldman Sachs and Morgan Stanley (each accounting for about 7% of assets), came close to the precipice during the financial crisis, but both are now thriving, and their stocks have roughly tripled from their 2008 lows.

The Broker-Dealers ETF should be able to withstand rising interest rates better than other financial-sector funds, says Leon. That’s because the ETF doesn’t contain any commercial banks, which can suffer when interest rates rise.

K11I-ETF SPOTLIGHT.indd
K11I-ETF SPOTLIGHT.indd
Advertisement
Advertisement

Most Popular

Turning 60 in 2020? Expect Lower Social Security Benefits
Coronavirus and Your Money

Turning 60 in 2020? Expect Lower Social Security Benefits

When you file for Social Security, the amount you receive may be lower.
July 30, 2020
These 2 Words Could Send Your Retirement Money to the Wrong Beneficiary
estate planning

These 2 Words Could Send Your Retirement Money to the Wrong Beneficiary

"Per stirpes" vs. "per capita." Making the wrong choice could cause an estate planning disaster.
July 30, 2020
Second Stimulus Check Update: HEALS Act vs. CARES Act
taxes

Second Stimulus Check Update: HEALS Act vs. CARES Act

When compared to first-round payments, the new Republican stimulus check proposal expands and protects payments for some people, but it shuts the door…
July 29, 2020

Recommended

Turning 60 in 2020? Expect Lower Social Security Benefits
Coronavirus and Your Money

Turning 60 in 2020? Expect Lower Social Security Benefits

When you file for Social Security, the amount you receive may be lower.
July 30, 2020
6 Money-Smart Ways to Spend Your Stimulus Check
Tax Breaks

6 Money-Smart Ways to Spend Your Stimulus Check

If you don't have to use your stimulus check for basic necessities, consider putting the money to work for you. You'll thank yourself later.
July 30, 2020
The 7 Best Funds for Beginners
mutual funds

The 7 Best Funds for Beginners

New investors have it better than ever. The best mutual funds and ETFs for beginners feature no minimum investments, dirt-cheap fees and broad market …
July 30, 2020
Get Your Retirement Plan Back on Track
Making Your Money Last

Get Your Retirement Plan Back on Track

Whether the damage to your savings was self-inflicted or unavoidable, we’ll help you revive your retirement plan.
July 30, 2020