The reason: Insurance companies make profit from spreads between what they owe policyholders and bond yields. The higher the Treasury yield, the better for insurance providers. [Insurance ETFs Wait on Higher Rates]
IAK, which recently celebrated its ninth anniversary, tracks the Dow Jones U.S. Select Insurance Index (DJSINST). The ETF is home to 63 stocks, but its top 10 holdings combine for over 57% of the fund’s weight. That group includes American International Group (NYSE: AIG), MetLife (NYSE: MET), Prudential (NYSE: PRU), Ace (NYSE: ACE) and Dow component Travelers (NYSE: TRV).
IAK charges 0.43% per year.
IAK vs. S&P 500
Chart Courtesy: Captain John Charts