GSIB

GSIB invests in stocks of companies that operate in the global banking sector. These are exclusively the banks classified as Global Systemically Important Bank (G-SIB) by the Financial Stability Board. To be designated as G-SIB, the bank has to be considered so systemically important to the global banking system, that the bank's failure could trigger a wider financial crisis or threaten the global economy. The Basel Committee on Banking Supervision is the primary evaluator for G-SIB designations. On an annual basis, the committee evaluates each bank's risk factors based on five primary categories: size, interconnectedness to other financial institutions, institution infrastructure, the bank's global footprint, and complexity of the bank's transactions. Stocks identified as G-SIB are automatically selected for the ETF portfolio and held on an equally weighted basis, rebalancing quarterly. Ironically perhaps, the ETF can lend up to one-third of the underlying portfolio value to potentially generate additional income.