Invesco KBW Property & Casualty Insurance ETF

KBWP

Market cap $462M

Launched on December 2, 2010, the Invesco KBW Property & Casualty Insurance ETF (KBWP) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Insurance segment of the equity market.

After the industry's combined ratio improved by 5.1 percentage points in 2024 to an 11-year low of 96.5% due in large part to a spectacular fourth quarter for the personal lines, our outlook for 2025 and 2026 contemplates narrower profit margins. A decidedly more favorable operating environment in the private auto business, which accounted for 33.6% of US P&C industry direct premiums written in 2024, will have negative implications for top-line growth in 2025 and 2026 in particular, as some carriers have begun to lower rates.

I rate KBWP a buy, as its focused P&C insurance portfolio is well-positioned for steady returns amid favorable macrotrends and regulatory support. High interest rates and moderate inflation support strong underwriting margins and investment income for KBWP's holdings, driving profitability and growth. The P&C insurance sector benefits from innovation, regulatory reforms, and rising demand, with a projected 4.3% CAGR and improving business models.

Designed to provide broad exposure to the Financials - Insurance segment of the equity market, the Invesco KBW Property & Casualty Insurance ETF (KBWP) is a passively managed exchange traded fund launched on December 2, 2010.

Looking for broad exposure to the Financials - Insurance segment of the equity market? You should consider the Invesco KBW Property & Casualty Insurance ETF (KBWP), a passively managed exchange traded fund launched on 12/02/2010.

I rate KBWP a buy, citing its attractive valuation, strong technicals, and positive seasonality for property & casualty insurance stocks. KBWP outperforms XLF and SPY year-to-date, benefiting from insurers' pricing power and financial strength post-2022 inflation. Risks include portfolio concentration, liquidity concerns, and the unique delayed cost recognition in insurance, but fundamentals remain compelling.

The Invesco KBW Property & Casualty Insurance ETF (KBWP) was launched on 12/02/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Insurance segment of the equity market.

KBWP provides investors with concentrated exposure to the P&C insurance industry in the USA, and has a low expense ratio. Insurance, particularly Property & Casualty, is less impacted by tariffs due to its domestic focus, making it a stable investment in uncertain global markets. Tariffs on auto and construction materials will increase costs, leading to higher premiums for auto and home insurance, boosting ETF revenues.

Sector ETF labels can be misleading; Technology ETFs, for example, vary significantly in holdings, risk profiles, and performance outlooks. The abundance of sector ETFs complicates investor decisions, making thorough analysis challenging and increasing the risk of missing profitable opportunities. Knowing ETF holdings is crucial to avoid poor performance; buying ETFs without analysis is akin to buying stocks without due diligence.

The Invesco KBW Property & Casualty Insurance ETF (KBWP) was launched on 12/02/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Insurance segment of the equity market.