Musings on SIVB and the Banking “Crisis”
By Donald Nalls, CFP®
“It’s only when the tide goes out that you discover who’s swimming naked.”
I have addressed a number of client emails over the past week with respect to the current “crisis” in banking. The clients wanted to know how much of the SIVB and First Republic bank’s stocks were in their mutual fund or ETF portfolios. Here at NSG we believe (deeply!) in Nobel laureate Merton Miller’s famous aphorism that, “diversification is your buddy.” To wit:
An investor with a broadly diversified global equity and bond allocation can have exposure to thousands of companies, issuers in dozens of industries, and countries around the world.
For instance, as of February 28, SIVB was just one of more than 9,000 companies in the MSCI All Country World IMI Index (MSCI ACWI IMI) and represented a mere 0.03% of the index.1 As of the same date, regional banks in total represented only 1.15% of the index, with the largest at 0.10%.
So, you can take a breath. Click Here to read a wonderful article by the outstanding Dimensional Fund Advisors research team. Enjoy.
- The MSCI All Country World IMI Index is a broad market-capitalization-weighted index of public companies across developed and emerging markets globally. As of February 28, 2023, the MSCI All Country World IMI Index included 9,010 companies. MSCI data © 2023, all rights reserved. Silicon Valley Bank weight represented by its parent company SVB Financial Group