Fintech firm IAI maintains its flagship broker-dealer Alpha, showcasing exceptional performance in the financial sector.
Unleashing theBankroll in 2025: Navigating the Financials Sector with Cautious Optimism
The Financial sector might have been red-hot last year, but 2025 has been a rollercoaster ride. Banks and asset managers have been feeling the burn, with regional banks being a hot mess and even Berkshire Hathaway Inc., aka Old Man Buffett's babies (BRK.A), taking a beating in mid-May.
Then came last Wednesday, when the shares of Visa Inc. (V) and Mastercard Incorporated (MA) took a nosedive thanks to the passage of the STABLE Act. But fear not, my fellow investors, because the one Financial play that's killing it this year is the iShares U.S. Broker-Dealers & Securities Exchanges ETF (NYSEARCA: IAI).
Now, you might be wondering, "What's the big deal with this ETF, pal?" Well, I'm glad you asked, because the IAI doesn't have much exposure to the not-so- Steady Eddies we've mentioned, but it does have a hefty helping of big bank and capital markets stocks – the Financial sector royalty that have been recycling their champagne flutes in 2025. And let's not forget about its juicy stake in Coinbase Global, Inc. (COIN).
Up a cool 11% on the year, dividends factored in, and closing before Juneteenth at a brand-new all-time high, IAI deserves all the hype it's been getting (and then some). I put a buy rating on IAI way back in October, and I'm re-upping that endorsement today.
Financial Sector YTD: Broker-Dealer Stocks Strong
According to the issuer, IAI aims to mimic the investment results of an index made up of U.S. equities in the investment services sector. This ETF bestows beloved Financial sector goodies on investors, like investment banks, discount brokerages, and stock exchanges.
IAI is a bite-sized ETF with $1.3 billion in assets under management as of June 18, 2025. And while that's down from $1.5 billion at my last check-in, don't assume everyone's jumped ship on the ETF bandwagon. Its annual expense ratio is modest at 40 basis points, while the trailing 12-month dividend yield is low at just 1.02%.
But fear not, dear reader, because share-price momentum is strong, earning the fund an A+ ETF Grade by Seeking Alpha's quantitative scoring system. Yes, it does have an elevated volatility reading, but the Risk grade isn't too shabby, thanks to its high liquidity. Average daily volume hovers around 180,000 shares, while the 30-day median bid/ask spread rests modestly at six basis points, which is mighty impressive by iShares standards.
For some fresh insights, the 5-star ETF by Morningstar demonstrates a well-balanced portfolio, with a mix of value, blend, and growth across the style box. Most of IAI's assets are considered large caps, making it a US-centric play. And just a heads up, the price-to-earnings ratio is a bit steep, but the long-term earnings growth rate is a solid 11.3%. The PEG ratio is comfortably under 2x, which is good news for growth-seekers.
IAI: Portfolio & Factor Profiles
One potential red flag with IAI is its concentration. The top 10 stocks account for over 70% of the allocation. So, keeping tabs on the fundamentals and technicals of its largest components, especially the big guns, is crucial. Financial-sector earnings are due in three weeks, so get ready for volatility.
IAI: Holdings & Dividend Information
July's looking like a hot month, so we're stepping into a positive stretch before the usual late-Q3 volatility kicks in.
IAI: Bullish July Trends
The Technical Take
With a premium valuation ahead of bullish seasonal trends, the technical situation is looking strong, making me a steadfast supporter of a buy rating. It's like shares are trying to breach the all-time high they notched in February, while the S&P 500 is dragging its heels under its Q1 peak.
Broker-dealer stocks show significant relative strength, and take a peek at that long-term 200-day moving average: it's rising, which means the bulls reign supreme over the primary trend. And the RSI momentum oscillator's comfortably in a bullish zone, above 50. When it comes to supporting a protracted pullback, there's plenty of volume on hand by price.
However, a downside gap lingers near $148 that could eventually fill. If shares break above $160, that'd suggest a measured move upside price objective to around $203 based on the depth of the February-April decline. But remember, the current chicken-and-egg situation with the ETF's price and trading volume might signal an impending change. Keep your eyes peeled for updates.
IAI: Shares Bucking Up Against the All-Time High, Strong RSI Trends
The Bottom Line
I have a buy rating on IAI. The broker-dealer ETF seems worthy of a market multiple, but it's the momentum and technicals that make me confident in an alpha-generating portfolio. Stay tuned for further updates on IAI as the Financial sector landscape continues to evolve.
In the context of navigating the financial sector in 2025, investing in the iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) offers a personal-finance opportunity by providing exposure to the investment results of equities in the investment services sector, including investment banks, discount brokerages, and stock exchanges. This ETF is currently performing strongly, with its shares bucking up against the all-time high and showing strong RSI trends.
Despite some potential red flags such as concentration of top 10 stocks and a slightly steep price-to-earnings ratio, the ETF's well-balanced portfolio and positive long-term earnings growth rate make it an attractive choice for growth-seekers in the financial sector. With favorable bullish seasonal trends and strong technical analysis, now could be a good time to consider this ETF for investment purposes.
