If you're interested in broad exposure to the Financials - Brokers/ Capital markets segment of the equity market, look no further than the iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI), a passively managed exchange traded fund launched on 05/01/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Brokers/ Capital markets is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.31 billion, making it one of the average sized ETFs attempting to match the performance of the Financials - Brokers/ Capital markets segment of the equity market. IAI seeks to match the performance of the Dow Jones U.S. Select Investment Services Index before fees and expenses.
The Dow Jones U.S. Select Investment Services Index measures the performance of the investment services 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 1.06%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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, Goldman Sachs Group Inc (GS) accounts for about 13.75% of total assets, followed by S&p Global Inc (SPGI) and Morgan Stanley (MS).
The top 10 holdings account for about 71.23% of total assets under management.
Performance and Risk
So far this year, IAI has gained about 6.64%, and it's up approximately 30.20% in the last one year (as of 05/27/2025). During this past 52-week period, the fund has traded between $115.11 and $159.30.
The ETF has a beta of 1.13 and standard deviation of 21.22% 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. Broker-Dealers & Securities Exchanges ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IAI, then, is not the best option for investors seeking exposure to the Financials ETFs segment of the market. Instead, there are better ETFs in the space to consider.
SPDR S&P Capital Markets ETF (KCE) tracks S&P Capital Markets Select Industry Index. The fund has $474.68 million in assets. KCE has an expense ratio of 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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iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI): ETF Research Reports The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report Morgan Stanley (MS): Free Stock Analysis Report SPDR S&P Capital Markets ETF (KCE): ETF Research Reports S&P Global Inc. (SPGI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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