U.S. ETFs With the Biggest Silicon Valley Bank Exposure

ETFs focused on regional banks were most exposed to Silicon Valley Bank stock.

Katherine Lynch 15 March, 2023 | 16:29
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This article originally appeared on Morningstar.com and has been slightly modified for an Asian audience.


As the ripples from SVB Financials’ SIVB meltdown spread across the financial sector, some funds are booking significant losses. U.S. Regional bank ETFs post large declines, and even some diversified funds suffer from financials exposure.

Investors in the regional bank stock exchange-traded funds have suffered the biggest losses. However, some broader financial sector funds, along with a few diversified stock funds, also are recording large declines after the collapse of Silicon Valley Bank. They include Diamond Hill Mid Cap DHPYX and Franklin Mutual Beacon BEGRX.

The Financial Select Sector SPDR ETF XLF fell 4.1% on Thursday, while SPDR S&P Regional Banking ETF KRE lost more than double that with a 8.2% plunge.

Investors in broad market index funds such as the SPDR S&P 500 ETF SPY or Vanguard Total Stock Market ETF VTI carry minimal exposure to the bank, but still experienced losses as most financial shares sunk on Thursday, March 9. The declines in bank stocks continued during Friday’s session.

Line chart of the performance of the largest financial ETFS.

In the U.S., some actively managed funds held larger positions in Silicon Valley Bank, and as a result, have experienced outsize losses. However, no funds had more than 5% in the bank’s stock, according to Morningstar Direct. (In addition, because traditional, open-end mutual funds report their holdings with a lag, some funds that are shown as owning the stock could have sold before Thursday’s plunge.) Still, some funds may have to book even bigger—if not total—after it was put under government control Friday and trading in its shares was halted.

Table of the worst performing financial ETFs following SVB Financials' collapse

ETFs With the Biggest Silicon Valley Bank Exposure

ETFs focused on regional banks were most exposed to Silicon Valley Bank stock, and as a result, fell the hardest Thursday.

Silicon Valley Bank was SPDR S&P Regional Banking ETF’s largest holding as of Wednesday when the $2.2 billion fund carried 2.3% of its portfolio in the company. The ETF declined 9.2% Thursday and is down 22.5% over the past year.

Other top holdings of SPDR S&P Regional Banking include Western Alliance Bancorp WAL, which fell 12.9%, and East West Bancorp EWBC, which declined 8.4%. The fund is the third-largest financial sector fund.

IShares US Regional Banks ETF IAT has had similar exposure. More than 3% of the fund was invested in SVB as of Wednesday. The iShares ETF dropped 8.2% on Thursday.

Investors in the more-diversified Financial Select Sector SPDR ETF were less affected by the bank’s collapse. Only 0.41% of the $13.1 billion portfolio was invested in Silicon Valley Bank stock as of Wednesday.

Table of the largest financial ETFs

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Katherine Lynch

Katherine Lynch  is a data journalist at Morningstar

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