Despite its name, Bank of America (BAC) actually isn’t the largest bank in the United States. That honor actually goes to JPMorgan Chase, which has $2.74 trillion in assets. Bank of America is number two, with $2.38 trillion, as of 2018, making it the eighth largest bank in the world. And, despite its name today, it traces its roots back to two divergent banks – Bank of Massachusetts on the east coast, founded in 1784, and Bank of Italy, a San Francisco-based bank for Italian immigrants, founded in 1904.

The bank as it’s known today was formed in 1998 after the merger of NationsBank and BankAmerica, and it is today part of the Big Four of U.S. banks, serving more than 10% of all American deposits and offering services in commercial banking, retail banking, wealth management and investment banking. Its subsidiaries include Merrill Lynch and it operates branches in all 50 U.S. states, more than 15,000 ATMs machines and serves more than 46 million customers.

Bank of America’s market cap is $296 billion as of 2019, and it generated more than $91 billion in revenue in 2018.

Rationale

The most direct way to gain exposure to Bank of America is to buy its listed shares, of course, but there are reasons for investors to reconsider that approach. As a bulge bracket bank, BAC operates in a highly regulated space, subject to ongoing government oversight and scrutiny. This helps to protect its customers and other participants in the financial system from loss due to corporate misdeeds, but limits BAC’s potential for growth as a business itself. What’s more, Bank of America received a bailout during the 2008 financial crisis, highlighting its susceptibility to worldwide financial problems that have not entirely gone away in the years since.

However, for investors interested in gaining exposure to the banking sector, rather than buying BAC shares themselves should consider buying funds that provide exposure to Bank of America and other financial services firms. After all, the return drivers that will benefit BAC might also benefit other similar banks. As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like Bank of America through these types of funds.

Investing in BAC 

A search on Magnifi suggests that investors can gain access to Bank of America via a number of different funds and ETFs, including those shown below. 

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