Stockchase Opinions

Mike Philbrick iShares D J Broker-Deal E.T.F. IAI-N DON'T BUY May 23, 2023

Generally, the challenge with a broker/dealer ETF is it's more sensitive to the vagaries of the market. If the US market is flattish for the next decade, then ETFs like this will underperform, because they are highly levered to the market. He would underweight this ETF.

$87.620

Stock price when the opinion was issued

E.T.F.'s
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TOP PICK

There is a lot of interest rate sensitivity. There is cyclical balance from the market data. Volumes should go higher if times get tougher.

TOP PICK

This sector holds big bank deposits, which benefit from higher interest rates – especially shorter term rates. It also benefits as the market improves.

BUY

Is this a good way to play the US financials or you rather play the individual names? There is nothing wrong with this, but this Is focused on the broker-dealers side and you don’t want to miss on some of the retail banks

BUY

It is one of their largest holdings. This is really a play on short rates. If Fed funds keep rising, then this will continue to work. The fundamentals look like they will continue to look good. The ETF is part exchange, part large cap, and interest rate sensitives trading houses. He likes it all day long.

DON'T BUY

This broker – dealer ETF has a decent dividend and is composed of half brokers and half exchanges. He likes the exchange side, with large margins and good scale. The broker side will start to weaken, so they have exited their position and thinks it will worsen more.

PAST TOP PICK
(A Top Pick Dec 07/17, Down 5%) He got out months ago. They technically stopped out of his process.
PAST TOP PICK
(A Top Pick Apr 11/18, Down 5%) Exchanges have good ongoing revenues. They make money on deposit balances, but have been impacted by rising short term rates. It was time to move on and he no longer holds it.
BUY

Financials have been slower to recover, only gaining strength in September-October. Still have a long way to go. If you believe we had a generational low in long-term interest rates, and we're just entering a reflationary cycle, insurance companies benefit as assets go up in price. Higher rates are really good. Also interesting are KIE, KRE and KBE. Most interesting is IAI, making new highs. As a group, financials have underperformed since 2007, so they should now have a tailwind in this environment.

BUY
Really likes the investment management sector. It should be pretty good business in a time of a decent market and reflation. When a group gets into gear, you want to look at the leaders. One of the best performing financial ETFs out there.