Insurance ETFs Your Broker Forgot to Mention

Insurance, be it health, home, auto or life, is not a product most folks are apt to forget about. It is easy to remember the need for health insurance in the facing of soaring health care costs in the U.S. Additionally, many Americans are reminded every month that they have auto and/or home insurance when the bill arrives in the mail. To that end, it is somewhat odd that ETFs tracking insurance providers lead anonymous existences relative to those funds following other firms in the financial services sector. Despite all the emphasis on ETFs that are heavy on bank stocks, investors might want to have a look at an insurance ETF or two. A recent research note
courtesy of S&P Capital IQ says as much
. In terms of the property and casualty insurers, those firms have rebounded from major catastrophe losses and are reporting price increases on premiums, but there are opportunities throughout the insurance universe. Here are some of the insurance ETFs brokers are not talking about.
SPDR S&P Insurance ETF KIE
The SPDR S&P Insurance ETF is one of the larger members of the insurance ETF group with almost $108 million in assets under management. KIE differs from some of its rivals in that none of its 46 holdings receive an allocation greater than 2.57 percent. KIE's top-10 holdings range in weight from 2.36 percent to 2.57 percent, so it is fair to say this fund is not excessively weight to just one or two big insurance names. In fact, KIE does not focus on the most familiar insurance providers such as American International Group
AIG
or Prudential
PRU
. That is to say the fund spreads its weight around over large-, mid- and small-cap names. KIE is up 14 percent year-to-date, but the fund, like its rivals has significantly lagged bank stock ETFs such as the Financial Services Select Sector SPDR
XLF
.
iShares Dow Jones U.S. Insurance Index Fund IAK
The iShares Dow Jones U.S. Insurance Index Fund is one of the ETFs rated Overweight by S&P Capital IQ in the aforementioned research note and this fund does business a little bit differently than does KIE. For example, IAK's top-two holdings, AIG and MetLife
MET
, combine for over 17 percent of IAK's weight. It takes seven KIE constituents to exceed 17 percent of that fund's weight. IAK is also 12 basis points costlier with an expense ratio of 0.47 percent. The fund is about 55 percent allocated to property/casualty firms with another 32.5 percent going to life insurance providers. The differences between IAK and KIE are worth noting if for no other reason than that there is a performance gap between the two. Year-to-date, IAK trails its SPDR rival by about 150 basis points.
iShares Dow Jones U.S. Healthcare Providers Index Fund IHF
Obviously, the iShares Dow Jones U.S. Healthcare Providers Index Fund does not provide for an apples-to-apples comparison to the other ETFs mentioned here. It is also far larger with $226.1 million in AUM. Differences aside, IHF cannot be forgotten about. Not with a presidential election with potentially deep consequences for the health care-related companies barely more than a month away. Pharmaceuticals stocks and ETFs
have been highlighted as election plays
, but a fund like IHF must be included. If there is debate regarding the impact of Obamacare on health insurance providers, IHF's performance might put that debate to bed. The fund is up 17.5 percent year-to-date and 34.2 percent over the past year. New Dow component UnitedHealth
UNH
and Express Scripts
ESRX
combine for over 27 percent of IHF's weight.
PowerShares Dynamic Insurance Portfolio PIC
With average daily volume of less than 1,340 shares, the PowerShares Dynamic Insurance Portfolio is not particularly voluminous. However, a 13.5 percent year-to-date gain shows PIC is yet another example of an ETF not needing large volume to deliver large returns. The $7.6 million fund focuses primarily on life and property/casualty providers. Top holdings include Allstate
ALL
, Aflac
AFL
and MetLife. For more on ETFs, click
here
.

Posted In: Analyst ColorLong IdeasNewsSector ETFsShort IdeasPoliticsPre-Market OutlookIntraday UpdateMarketsAnalyst RatingsTrading IdeasETFs

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.