ETF tracking broker-dealers and exchanges rakes in cash

The iShares fund has big holdings in Goldman, Morgan Stanley and Schwab.
MAR 14, 2018

As investors grow increasingly bullish on financial stocks, they're flocking to an exchange-traded fund that tracks a specific niche. The iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) has taken in more than $70 million over the past seven days, including a $20.5 million inflow on March 8, the largest in almost four years. The fund follows an index of investment service providers, securities and commodities exchanges, with a special focus on U.S. broker-dealers. Over the past week, IAI also has seen a massive amount of activity. On Monday, traders moved over $27.1 million worth of the ETF, compared with average daily turnover of $2.8 million over the past year, according to Bloomberg data. On March 8, more than $35 million changed hands, the largest volume in over five years, the data show.http://edit.investmentnews.com/assets/graphics src="/wp-content/uploads2018/03/CI114648314.PNG"

The possibility of a changing financial regulatory framework has driven a lot of the enthusiasm for the sector. The Senate this week is working to complete consideration of changes to the Dodd-Frank Financial Regulatory Reform Bill that could give some regulatory relief to small and midsized banks. Oppenheimer & Co. Inc.'s Ari Wald advises buying capital markets and banks and singles out IAI as an attractive opportunity. The fund's largest holding is Goldman Sachs Group Inc., which comprises over 10% of the portfolio. Others include Morgan Stanley, at 9.7%, and Charles Schwab Corp., at 8.9%.

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