AIG (NYSE: AIG) is one of the most notorious names in the financial crisis. A couple years after its bailout, it’s apparently back from the dead and in some exchange traded funds (ETFs), if you want it.
One of the market’s top performers this year was on life support just a few years ago, reports Serena Ng for The Wall Street Journal. AIG’s stock has shot up 97% so far this year, and42% in December alone. It’s also the fourth-best performer in the S&P 500 this year.
How’d they do that?
- AIG sold two large overseas units, shed risky businesses, regained access to the bond markets and obtained new credit lines from banks to replace its funding from the government.
- Investors are now anticipating the U.S. will be able to sell a 92% stake in AIG, recoup its $182.3 billion bailout, and leave behind some value for private shareholders. That’s something few thought would ever happen.
AIG doesn’t have the cache it once did – it has been given a neutral rating by UBS Investment Research. Its total implied market value is just above $80 billion, which is well off what it was prior to the crisis. But it’s also still a large insurer with a global presence. [Regional Bank ETFs Benefit From M&A Activity.]
For that reason, if you’re bullish on AIG’s future and like the looks of what’s happened so far but don’t want to go all-in with a single stock, consider these ETFs, all of which have a small weighting in the insurer:
- Rydex S&P Equal Weight Financial ETF (NYSEArca: RYF): AIG is 1.9%
- Rydex S&P 500 Pure Value ETF (NYSEArca: RPV): AIG 1.4%
- PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF): AIG 1.2%
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.