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.
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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
-
Setting Objective Criteria for Employee Bonuses Aligned With Company GoalsWhen employees win, the company wins.
-
A Modern Guide to Money Etiquette: Gifts, Tips, Splitting Bills and MoreWhat is modern money etiquette? The customs for splitting a restaurant check, purchasing a wedding gift, tipping and more have evolved. These guidelines can help.
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
