This week on ETF Sector Focus, we look at those funds that invest in the wirehouses and other broker-dealers, and in the overall financial services industry.
The iShares Dow Jones U.S. Broker-Dealers ETF (IAI) has been lagging the major markets slightly over the past 12 months, with a 12-month return of about 18%. But year to date, it is pulling ahead of the overall markets with 6% returns.
Over the past 12 months, the Vanguard Financials ETF (VFH) has moved up roughly 22%. This puts it ahead of the Dow Jones, in line with the S&P 500 but behind the Nasdaq (which is up more than 27% over the last year).
VFH’s major holdings are JPMorgan, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley. Year to date, it is up roughly 5%, which puts its performance in line with most major stock markets, except for the Dow Jones, now up about 5.5% in 2011.
VFH’s composition is quite similar to that of the iShares Dow Jones U.S. Financial Sector (IYF). VFH had a slightly better 12-year performance, but IYF is now tracking the Vanguard ETF very closely in year-to-date results.
And the Financial Select Sector SPDR (XLF) shares a similar portfolio, though one of its top-five holdings include Berkshire Hathaway and Citigroup.
The PowerShares Dynamic Financials (PFI) has a broader focus. Its major components are Principal Financial, Capital one, Prudential Financial, US Bancorp, PNC Financial, Ameriprise and T. Rowe Price.
PFI has a strong 12-month improvement of about 23%. But it’s up only 4.5% in 2011, putting it behind IAI and VFH so far this year.
Emerging-market financial ETFs are having a tougher time. The EGShares Emerging Markets Financials (EFN) is down more than 12.5% in 2011, after rising about 10% over the past 12 months. It includes many Brazilian and Chinese banks and insurance.
The SPDR S&P International Financial Sector ETF (IPF), however, with top-10 holdings in Australia, Hong Kong, Spain and France, is up a strong 9% in 2011 – putting it ahead of the U.S. markets.
For the past 12 months, though, IPF has trailed the Dow and S&P, with returns of roughly 15%.