It's that time again: Third-quarter earnings season kicks off this week. First up, J.P. Morgan (JPM), which beat earnings estimates Tuesday morning, impacting almost 200 ETFs holding the stock.
The U.S.' largest bank reported stronger-than-expected earnings, posting $2.92 per share versus the $2.26 per share that analysts expected.
Like many financial institutions, J.P. Morgan has faced many difficulties over the past quarter, which include a massive $500 million money laundering scandal, continued COVID-induced economic slowdowns, and the specter of ultra-low interest rates long term. (Read: "Negative Interest Rates Coming To U.S.?")
As a result, J.P. Morgan's stock price has nosedived 25% year to date. That's worse than the broader banking sector, as represented by the segment's largest ETF, the $18.2 billion Financial Select Sector SPDR Fund (XLF). XLF has fallen only 16% year to date.
But XLF is only one of many ETFs in which J.P. Morgan appears. The bank is, in fact, one of the most widely held stocks among U.S.-listed ETFs.
(To find out in which ETFs a given stock appears, check out our free ETF Stock Finder tool.)
J.P. Morgan: Widely Held Bank Stock
J.P. Morgan appears in 197 ETFs. As one might expect, the stock appears in the highest proportions in broad U.S. financial services and banking ETFs, such as XLF, the $1.27 billion iShares U.S. Financial Services ETF (IYG) and the $748 million Fidelity MSCI Financials Index ETF (FNCL):
|ETFs With The Highest Allocation To J.P. Morgan|
|Ticker||Fund||AUM||JPM Allocation||JPM Market Value|
|IYG||iShares U.S. Financial Services ETF||$1.27B||10.97%||$201.96M|
|XLF||Financial Select Sector SPDR Fund||$18.20B||10.94%||$1.98B|
|FNCL||Fidelity MSCI Financials Index ETF||$748.15M||9.11%||$68.03M|
|VFH||Vanguard Financials ETF||$5.95B||9.09%||$566.97M|
|KBWB||Invesco KBW Bank ETF||$745.09M||7.80%||$57.87M|
|FAS||Direxion Daily Financial Bull 3x Shares||$1.54B||7.64%||$104.33M|
|IYF||iShares U.S. Financials ETF||$1.31B||6.14%||$78.69M|
|IXG||iShares Global Financials ETF||$248.74M||5.37%||$13.20M|
|PKW||Invesco BuyBack Achievers ETF||$674.03M||4.96%||$33.47M|
Source: ETF Stock Screener; data as of Oct. 12, 2020
But J.P. Morgan appears in many nonbanking sector ETFs, too, including dozens of actively managed and multifactor products, as well as value plays like the $82 million Invesco Dow Jones Industrial Average Dividend ETF (DJD) and the $649 million Invesco Dynamic Large Cap Value ETF (PWV). It even appears in 14 ESG ETFs.
Interestingly, though, its 10th-highest weighting occurs in the $674 million Invesco BuyBack Achievers ETF (PKW). PKW tracks companies that have repurchased 5% or more of their own stock in the past 12 months, on the assumption that companies buying back stock do so because they know they are undervalued (as opposed to being a cash cow, with nothing better to do with its earnings).
PKW puts 5% of its portfolio, or $33 million, into J.P. Morgan stock. (Read: "Buyback ETFs Usually Outperform.")
KBWB Well-Positioned For This Week's Earnings
J.P. Morgan isn't the only financial institution reporting earnings this week; it's simply the largest. Other banks reporting this week include Citigroup (C), Wells Fargo (WFC) and Bank of America (BAC).
For what it's worth, those three stocks, as well as J.P. Morgan, appear in 124 ETFs, according to ETF Action's overlap screener.
What’s the ETF with the highest weighting in all four? That would be the $745 million Invesco KBW Bank ETF (KBWB), with 30.23% of its portfolio in those four stocks.
Contact Lara Crigger at [email protected]