Regional banks ETFs are rising this week. There are many reasons behind this trend.
The economy is gaining momentum and most of the recent economic reports, including the jobs report, have been better than expected. Regional banks benefit from an improving economy as loan growth picks up.
And rates are rising. The 10-year note yield, which was around 2.4% at the beginning of the year had surged to over 3.1% last month. It has since come down to around 2.95%, mainly due to geopolitical concerns.
Rates have been inching higher again after the jobs report and the Fed appears all set to raise rates at its meeting next week.
Last month, the congress approved the biggest roll-back of Dodd-Frank reforms that were enacted in the aftermath of the financial crisis. Small and regional banks are set to benefit from easing of these regulations.
A strong economy and higher interest rates benefit all banks but regional banks stand to benefit more since interest rate spread is their main source of earnings.
The SPDR S&P Regional Banking ETF (KRE - Free Report) is the most popular ETF in the space with $5.2 B in AUM. It’s an equal-weighted ETF with 120 holdings.
The iShares U.S. Regional Banks ETF (IAT - Free Report) 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.
The PowerShares KBW Regional Banking Portfolio (KBWR) also follows equal-weighing methodology. It has 50 holdings and higher exposure to small and micro-cap banks than the other two.
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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.
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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 >>
Regional banks ETFs are rising this week. There are many reasons behind this trend.
The economy is gaining momentum and most of the recent economic reports, including the jobs report, have been better than expected. Regional banks benefit from an improving economy as loan growth picks up.
And rates are rising. The 10-year note yield, which was around 2.4% at the beginning of the year had surged to over 3.1% last month. It has since come down to around 2.95%, mainly due to geopolitical concerns.
Rates have been inching higher again after the jobs report and the Fed appears all set to raise rates at its meeting next week.
Last month, the congress approved the biggest roll-back of Dodd-Frank reforms that were enacted in the aftermath of the financial crisis. Small and regional banks are set to benefit from easing of these regulations.
A strong economy and higher interest rates benefit all banks but regional banks stand to benefit more since interest rate spread is their main source of earnings.
The SPDR S&P Regional Banking ETF (KRE - Free Report) is the most popular ETF in the space with $5.2 B in AUM. It’s an equal-weighted ETF with 120 holdings.
The iShares U.S. Regional Banks ETF (IAT - Free Report) 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.
The PowerShares KBW Regional Banking Portfolio (KBWR) also follows equal-weighing methodology. It has 50 holdings and higher exposure to small and micro-cap banks than the other two.
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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