ETF Talk: Pursuing Personal Gains in Personal Finance

With the current banking crisis still ongoing, the finance industry has been rough sailing as of late.

But like any storm, this one will assuredly not last forever. And when it comes to investing, a short-lived storm might be the perfect time to invest, especially when a market sector is expected to rebound.

Such is the case with the iShares U.S. Financial Services ETF (IYG). Established in 2000 by Blackrock, IYG invests in a market-cap-weighted subset of U.S. stocks that consists entirely of financial service firms.

All of the stocks IYG is composed of come from the Dow Jones U.S. Financial Services Index, featuring a broad spectrum of financial services, including the bank, asset management, consumer finance, specialty finance, investments service and mortgage finance industries. IYG’s index is reconstituted annually and is subject to quarterly reviews.

IYG only contains U.S. stocks, with more than 72% percent of its assets in finance, and around 26% percent in the commercial sector, offering pure exposure to the financial services segment of the market. Top holdings include JPMorgan Chase & Co. (JPM), Visa Inc. Class A (V), Mastercard Incorporated Class A (MA), S&P Global, Inc. (SPGI), Wells Fargo & Company (WFC), Bank of America Corp (BAC) and American Express Company (AXP).

Chart courtesy of StockCharts.com.

Like many assets in the financial sector, IYG has had lackluster performance of late, with minimal returns. As of April 12, IYG is down 2.32% in the last month, 9.22% in the past three months and 4.80% for the year to date (YTD). However, the fund has a relatively inexpensive expense ratio of only 0.39%. With the finance sector likely to rebound when the banking crisis finally recedes, getting in while the prices are low might prove to be a fruitful investment.

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Even then, it’s important to consider your individual financial situation and goals carefully before making any investment. Investors are always encouraged to do their due diligence before adding any stock or ETF to their portfolios.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You may just see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.