Which Exchange-Traded Funds Have the Largest Stake in Silicon Valley Bank?
The collapse of Silicon Valley Bank (SVB) is having ripple effects throughout the entire economy. For investors, one of these is the repercussions of being invested in funds which have exposure to the bank.
Luckily, as Morningstar director of passive strategies research Bryan Armour explained, few funds had significant exposure to SVB, especially for exchange-traded funds (ETFs).
“The impact of SVB’s fallout was muted for broadly diversified portfolios. Those caught with the largest stake in SVB tended to be actively managed mutual funds with concentrated portfolios. Managers of these funds may have sold some of their stake before the stock dropped too far — performance should be telling,” Armour explained in his statement.
According to Seeking Alpha, Silicon Valley Bank is currently owned by 200 different ETFs.
As Armour explained, for example, the contagion effect on regional banks caused iShares US Regional Banks ETF (IAT) to drop 13% from Wednesday, March 8 through Friday, March 10, and another 13% on Monday, March 13 as of 3:30pm ET. “Mid- and small-value funds were the hardest hit on [March 13], thanks to a greater exposure to regional financial services stocks,” he added.
Vanguard, State Street Global Advisors and BlackRock were the three largest shareholders in Silicon Valley Bank, The Financial Times reported, citing Refinitiv data, with a combined stake of 21.6% as of Dec. 31.
On March 14, thanks to regional banks stocks bouncing back, prices of the ETFs bounced back, as well.
Here are some ETFs which had the most holdings in Silicon Valley Bank:
SPDR S&P Regional Banking ETF (KRE)
KRE has 2.41% holdings in SVB, according to MarketWatch. KRE was up around 6% on March 14, but is down 18% in the past five days.
BlackRock Future Financial & Technology ETF (BPAY)
BPAY had 4.3% in SVB holdings on March 10 (pre-collpase) and was the ETF most exposed to the bank, according to The Financial Times. As of March 9, it had 1.7% in holdings, according to Morningstar Direct data. As of March 13, BPAY was down 6% and 11% year-to-date, according to BlackRock.
iShares US Regional Banks ETF (IAT)
IAT had 3.21% holdings in SVB on March 10, according to Seeking Alpha. IAT was up 6% on March 14 but down 21% both in the past five days and year-to-date.
Invesco KBW Bank (KBWB)
KBWB had a 2.95% allocation to SVB on March 10, according to Seeking Alpha. The fund was up 5.6% on March 14 and down 18% in the past five days and 15% year-to-date.
Invesco S&P 500 GARP ETF (SPGP)
SPGB had a 2.15% allocation in the bank on March 10, Seeking Alpha noted. The fund was up 2% on March 14, and down 5% in the past five days and 1% year-to-date.
What Can Investors Do?
According to Peter Cohan, associate professor of management practice at Babson College, it is too late for investors in SVB-stock heavy ETFs and mutual funds to do much about the losses they have already suffered.
“If those investors have gains in other investments, they might consider taking their profits on those other investments and using the losses on their SVB-heavy investments to reduce their taxes,” said Cohan. “If investors still have extra cash, I would consider a low-expense, low-fee U.S. government securities money market fund.”
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