Why IYF Has Been in Bear Country All Year



Overview of IYF

The iShares Dow Jones US Financial Sector ETF (IYF) seeks to track the performance of the Dow Jones US Financials Index. As of February 5, IYF had a market capitalization of nearly $1.2 billion, and on average, it sees shares worth $9.2 million trade hands every day.

IYF has a portfolio similar to those of the Vanguard Financials ETF (VFH) and the Financial Select Sector SPDR ETF (XLF), except it invests 6.5% in the software and services industry. Its largest holdings include Wells Fargo & Company (WFC), Berkshire Hathaway, J.P. Morgan Chase & Company (JPM), and Bank of America (BAC). These firms have weights of 6.4%, 6.3%, 6.1%, and 4.4%, respectively, in IYF. YTD (year-to-date), IYF has lost 13.7% and has underperformed the broad markets.

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Moving average analysis

On February 5, IYF closed at $78.31, which was below its 100-day, 50-day, and 20-day moving averages of $86.63, $85.38, and $79.87, respectively. The chart above shows that IYF has broken below its 100-day moving average on December 31. This marks the beginning of a downward trend. Technical analysts view such crossovers as trend reversal signals and view this as bearish.


The 14-day RSI (relative strength index) for IYF was 37.7 as of February 5. This suggests the stock is approaching oversold levels and may be considered undervalued. (An RSI figure below 30 is an indication of an oversold stock while an RSI above 70 denotes an overbought stock.)

Continue to the next part for a closer look at IYF’s outflows so far in 2016.


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