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

Looking for broad exposure to the Financials - Regional Banks segment of the equity market? You should consider the iShares U.S. Regional Banks ETF (IAT), 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.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Regional Banks is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $708.40 million, 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

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 3.14%.

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 13.80% of total assets, followed by Us Bancorp (USB) and Truist Financial Corp (TFC).

The top 10 holdings account for about 67.84% of total assets under management.

Performance and Risk

So far this year, IAT has lost about -8.14%, and was up about 9.37% in the last one year (as of 03/31/2025). During this past 52-week period, the fund has traded between $39.17 and $56.90.

The ETF has a beta of 1.08 and standard deviation of 29.83% for the trailing three-year period, making it a high risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.

Alternatives

IShares U.S. Regional Banks ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IAT is an excellent option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

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 $50.10 million in assets, SPDR S&P Regional Banking ETF has $3.31 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.

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This article originally published on Zacks Investment Research (zacks.com).

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