Insurance stocks are up 50% after a near meltdown in November.
The KBW Insurance ETF (KIE) is trading near $27 after dropping to $18 on November 20. The insurance sector came under pressure as the credit markets froze and bond prices fell. Insurance companies are large investors in the bond market.
Since then, credit markets have eased and bond prices have partially recovered.
More improvement could be on the way. According to the Wall Street Journal’s Heard on the Street column, corporate bond prices appear to have more room to rally and that would be good news for insurance stocks.
KIE is the largest insurance ETF with over $110 million of assets. The fund has a dividend yield of 3% and carries an expense ratio of 0.35%. Top holdings include Aflac (AFL), MetLife (MET), and Travelers (TRV).
Other ETFs that specialize in insurance include the Dow Jones U.S. Insurance Index Fund (IAK) and the PowerShares Insurance Portfolio (PIC).
See the ETF Directory for a complete listing of Industry ETFs.