Financials stocks are the best performers among all S&P sectors over the past month, thanks mainly to the improving economy and rising hopes of a rate hike by the Fed in December. Fed fund futures currently suggest about 93% probability of another rate increase this year. Within the broader financials sector, regional banks are among the best performers.
A strong economy and higher interest rates benefit all banks’ profitability but regional banks will benefit more since interest rate spread is their main source of earnings. Further small and mid cap banks will also benefit from tax reforms, if anything gets done this year.
There are three ETFs that provide exposure to a diversified portfolio of regional banks.
SPDR S&P Regional Banking ETF (KRE - Free Report)
KRE is the most popular in the space with $3.6 billion in AUM. It’s an equal-weighted ETF; holding 109 securities in almost equal weights. Equal weighting results in higher exposure to mid and small cap banks.
The fund has an expense ratio of 35 basis points and a dividend yield of 1.39%.
iShares U.S. Regional Banks ETF (IAT - Free Report)
IAT has 53 holdings and top three holdings—U.S. Bancorp (USB - Free Report) , PNC Financial (PNC - Free Report) and BB&T —account for more than one-third of assets.
It has an ER of 44 basis points and a dividend yield of 1.45%.
PowerShares KBW Regional Banking Portfolio (KBWR - Free Report)
KBWR is also an equal-weighted ETF with 50 holdings. It has higher exposure to small and micro-cap banks than the other two.
It has expense ratio of 35 basis points and a dividend yield of 1.59%.
To learn more about these ETFs, please watch the short video above.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Financials stocks are the best performers among all S&P sectors over the past month, thanks mainly to the improving economy and rising hopes of a rate hike by the Fed in December. Fed fund futures currently suggest about 93% probability of another rate increase this year. Within the broader financials sector, regional banks are among the best performers.
A strong economy and higher interest rates benefit all banks’ profitability but regional banks will benefit more since interest rate spread is their main source of earnings. Further small and mid cap banks will also benefit from tax reforms, if anything gets done this year.
There are three ETFs that provide exposure to a diversified portfolio of regional banks.
SPDR S&P Regional Banking ETF (KRE - Free Report)
KRE is the most popular in the space with $3.6 billion in AUM. It’s an equal-weighted ETF; holding 109 securities in almost equal weights. Equal weighting results in higher exposure to mid and small cap banks.
The fund has an expense ratio of 35 basis points and a dividend yield of 1.39%.
iShares U.S. Regional Banks ETF (IAT - Free Report)
IAT has 53 holdings and top three holdings—U.S. Bancorp (USB - Free Report) , PNC Financial (PNC - Free Report) and BB&T —account for more than one-third of assets.
It has an ER of 44 basis points and a dividend yield of 1.45%.
PowerShares KBW Regional Banking Portfolio (KBWR - Free Report)
KBWR is also an equal-weighted ETF with 50 holdings. It has higher exposure to small and micro-cap banks than the other two.
It has expense ratio of 35 basis points and a dividend yield of 1.59%.
To learn more about these ETFs, please watch the short video above.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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