By: The ETF Professor, Benzinga Staff Writer
Exchange traded funds tracking insurance providers are often overshadowed by more popular financial services fare, namely those ETFs that are home to major bank stocks.
That scenario could change this week as a plethora of big-name insurance firms step into the earnings confessional, perhaps shifting investors' attention to select insurance ETFs in the process.
Health insurance provider Humana (HUM) reported earlier Monday, but that is just the beginning of what is shaping up to be a brisk week of earnings reports from a variety of insurance providers.
Humana is a top-10 holding in the iShares Dow Jones U.S. Healthcare Providers Index Fund (IHF), a $242.1 million ETF that prior to Monday, was up 5.8 percent year-to-date. IHF now sits up 8.3 percent year to date on Tuesday.
Over the course of the week, other IHF constituents such as Cigna (CI) and Coventry Health Care (CVH) report as well. Add those two with Humana and by the time this week is over, 13.5 percent of IHF's weight will have delivered earnings updates.
What will prove pivotal to the ETF's near-term fortunes is the guidance, if any, given by these companies.
Some analysts see double-digit EPS growth for the health insurance sub-sector this year. If IHF constituents can convince investors that growth is realistic, the ETF could be a viable buy-on-the-dip candidate.
The thinly-traded (average daily volume of less than 800 shares) PowerShares KBW Property & Casualty Insurance Portfolio (KBWP) will be another insurance ETF worth checking in with as the week moves along. AXIS Capital Holdings (AXS), which represents 4.16 percent of the ETF's weight, reported results Monday.
Other KBWP holdings scheduled to report later this include Endurance Specialty Holdings (ENH), Platinum Underwriters (PTP), Kemper (KMPR) and Montpelier Re (MRH). That quarter combines for over 13 percent of KBWP's weight.
With $173.63 million in assets under management, the SPDR S&P Insurance ETF (KIE) is one of the largest non-health insurance ETFs.
Home to 46 stocks, the ETF has jumped almost seven percent in the past month and is now found bumping up against some stiff resistance at $48.
No single holding receives an allocation of more than 2.76 in KIE, but plenty of the fund's marquee names report throughout February. Hartford Financial (HIG) reported after the bell Monday, Prudential (PRU) follows on Wednesday as does Allstate.
Genworth (GNW), KIE's largest holding, reports Tuesday.
Bottom line: With over 10 percent of KIE's weight delivering earnings reports over the next three days and some of the ETF's most recognizable names reporting later this month, investors should know soon whether the fund has the chops to break resistance at $48 and start a new up leg.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.