Lehman, Merrill, AIG and BofA

The action over the weekend resulted in Lehman Brothers (LEH) going into bankruptcy and Merrill Lynch(MER) selling itself to Bank of America (BAC).

There was no news on American International Group (AIG) which is indicated to open down 40% in pre-market trading over concerns about credit rating changes.

The only ETF with significant to exposure to Lehman Brothers was the Claymore/Great Companies Large-Cap Growth Index ETF (XGC) which had a concentration as high as 2.8% before Lehman Brother’s share price meltdown last week.

Merrill Lynch makes up 6% of the holdings of the Dow Jones U.S. Broker-Dealers Index Fund (IAI).  Lehman Brothers exposure was only around 1% of IAI holdings as of Friday.

AIG plays a big role in several ETF portfolios.  Funds which recently held stakes greater than 4% includeProShares Ultra Financials (UYG), and PowerShares FTSE RAFI Financials Sector Portfolio (PRFF).  Those percentages are likely to come down significantly today as the market cap of AIG declines.

Bank of America is ubiquitous across the financial sector and large cap ETFs.  Funds with more than 5% exposure to BofA include the First Trust Morningstar Dividend Leaders Index Fund (FDL) with nearly an 11% concentration, WisdomTree High-Yielding Equity Fund at 9% (DHS), and Vanguard Financials ETF (VFH) at nearly 7%.  UYG and PRFF also hold stakes in BAC of greater than 5%.