Merger mania in stock exchanges has put exchange traded funds (ETFs) covering specialized areas of the financial sector in focus lately.
Shares of NYSE Euronext are getting a boost Monday from a report that rivals Nasdaq OMX Group and IntercontinentalExchange are in talks over a joint bid.
NYSE Euronext is in a deal to be acquired by Germany’s Deutsche Boerse, but ICE and Nasdaq are considering a rival bid, The Wall Street Journal reported Monday.
The $184 million iShares Dow Jones U.S. Broker-Dealers Index Fund (NYSEArca: IAI) includes NYSE Euronext shares in its top 10 holdings at 5% of assets. It also has more than 5% each in CME Group and ICE, according to portfolio manager BlackRock.
The broker-dealers ETF’s largest holdings are investment banks Goldman Sachs and Morgan Stanley, and the fund’s components also include asset managers and specialists.
“Would-be investors should note that the performance of these firms is highly dependant on (and correlated with) the health of the broader capital markets,” says Morningstar analyst Timothy Strauts. “All in, this fund basically represents a leveraged play on the stock market.”
The $78 million SPDR KBW Capital Markets ETF (NYSEArca: KCE) is a smaller alternative.
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