For investors seeking momentum, iShares US Insurance ETF IAK is probably on radar. The fund just hit a 52-week high and is up about 28% from its 52-week low price of $69.46/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
IAK in Focus
iShares US Insurance ETF provides exposure US companies that provide life, property and casualty, and full-line insurance. It charges 42 basis points in annual fees (see: all the Financials ETFs here).
Why the Move?
The insurance space in the broad US stock market has been an area to watch given the rise in yields. Insurance stocks are among the prime beneficiaries of a rate hike, as these are able to earn higher returns on their investment portfolio of longer-duration bonds. At the same time, these firms incur loss as the value of longer-duration bonds goes down with rising interest rates. Nevertheless, since insurance companies have long-term investment horizons, they can hold investments until maturity and hence, no actual losses will be realized.
More Earnings Ahead?
Currently, IAK has a Zacks ETF Rank #3 (Hold) with a High risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.
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iShares US Insurance ETF (IAK): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.