Visa Leading Dow And Financial Services ETF
The Dow Jones Industrial Average got a major boost last Thursday after one of its 30 components reported better-than-expected earnings and surged to a new all-time high. Visa Inc (NYSE: V), the world’s largest credit and debit card company, gapped higher and rallied over 10 percent as it blew through the January high of $235.50.
The index is a price-weighted index; the 23 point rally in Visa attributed almost 150 points to the nearly 200 point rally in the index.
Visa posted fourth quarter earnings that beat both top and bottom line estimates. It recorded revenue of $3.23 billion in Q4, beating estimates by $40 million and increasing 8.6 percent year-over-year. Adjusted earnings per share were $2.18, beating estimates of $2.10.
Along with an impressive report, Visa also announced that it has authorized a $5 billion share buyback program. For all of fiscal 2014, Visa posted revenue of $12.7 billion and an 8 percent increase from 2013.
Highlighted below are two ETFs that have been affected by Visa's surge.
The iShares Dow Jones US Financial Svc.(ETF) (NYSE: IYG) tracks 112 investment banks, commercial banks, asset managers, credit card companies and securities exchanges. The top individual holdings include Wells Fargo & Co at 11.6 percent, JPMorgan Chase & Co. with a 10.4 percent holding and Bank of America Corp coming in at 8.3 percent.
Visa is the fifth-highest weighted company in the ETF at 4.9 percent, and is the credit card company with the largest allocation. IYG is up 15 percent over the last 12 months and 9 percent over the last six months. It has an expense ratio of 0.43 percent.
The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) follows the 30 companies that make up the Dow Jones Industrial Average. This will be the ETF that should benefit most from the recent success of Visa’s stock price.
The company is the most heavily weighted holding in the index at 8.1 percent, followed by Goldman Sachs Group Inc with a 7 percent allocation and International Business Machines Corp at 6.2 percent.
DIA is up 11 percent over the last 12 months and 5 percent over the last six months. The index ETF has an expense ratio of 0.17 percent.
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