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After a surprise jump in consumer prices, the Bank of England stepped up to help ease the persistent inflation levels. The bank hiked interest rates by 25 bps to 4.25%. The Consumer Price Index (CPI) jumped to 10.4% annually in February, above the projected consensus of 9.9%. Per CNBC, the sudden increase in the inflation levels came after the rise in food and energy bills, which continues to put pressure on UK households.
According to the Monetary Policy Committee, global growth is expected to be stronger than estimated. A report by the committee states that its aim is to maintain inflation target at levels of 2%, ensuring sustainable growth and employment levels.
The labor market is expected to remain tight with real household disposable income levels remaining flat after the decision of the UK government to maintain the Energy Price Guarantee (EPG) at £2,500 for another three months from April.
Effect of Banking Failures
Per the Fiscal Policy Committee, the regulations in place for the UK banking system ensures that the banks have adequate and robust liquid capital supported by strong liquidity positions, ensuring their resilience.
UK households remain under pressure due to the increased cost of living and rising interest rates. However, fall in energy prices and an improved outlook for employment levels in the country means UK households will get relief in paying mortgages.
Even though confident on the current banking regulations, Bank of England officials maintain the stance that they need to remain alert in the middle of global banking uncertainties. As quoted on Reuters, Bank of England governor, Andrew Bailey said that the bank is prepared to lower the countercyclical credit buffer imposed on lenders, if the latest volatility threatened the credit supply of the economy.
ETFs in Focus
Against this backdrop, we highlight a few ETFs that have reported growth amid global uncertainties
iShares MSCI United Kingdom Small-Cap ETF (EWUS - Free Report)
The iShares MSCI United Kingdom Small-Cap ETF seeks investment results that generally correspond to the price and yield performance, before fees and expenses, of the MSCI United Kingdom Small Cap Index. The fund has 253 securities in its asset basket. Industrials, financials and consumer discretionary hold the top three spots with 20.1%, 16.7% and 15.5% share, respectively.
The fund had lost around 5.25% after the collapse of SVB but has added back 2.76% since mid-March. It has gathered $43.77 million in its asset base and charges an annual fee of 59 bps. The fund has a traded daily average volume of about 2,413 shares.
The iShares MSCI United Kingdom ETF seeks investment results that generally correspond to the price and yield performance of the MSCI United Kingdom Index. The fund has 81 securities in its asset basket with consumer staples taking the top spot with 20%. The next spots are held by financials and energy at 17.4% and 13.6%, respectively.
The fund had lost around 5% after the U.S. regional banking crisis but has gained 5.7% since mid-March. It has amassed $3.16 billion in its asset base and charges an annual fee of 50 bps. The fund has a traded daily average volume of around 1.84 million shares
First Trust United Kingdom AlphaDEX Fund (FKU - Free Report)
The First Trust United Kingdom AlphaDEX ETF seeks investment results that correspond generally to the price and yield, before fees and expenses, of the NASDAQ AlphaDEX United Kingdom Index. The fund has 76 securities in its asset basket with consumer discretionary, financials, materials and industrials all having double-digit weightage of 21.6%, 17.9%, 13.5% and 12.9%, respectively.
The fund fell 6.21% after the regional banking crisis but is up 4.31% since mid-March. The fund has gathered $22.71 million in its asset base and charges 80 bps. It has a traded daily average volume of about 9,600 shares.
The Franklin FTSE United Kingdom ETF seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE UK RIC Capped Index. The fund has a basket of 110 securities. Consumer staples and financials are the top two holdings with 18.5% and 17.3% share, respectively.
The fund had lost 4.95% after the collapse of SVB but has added back 4.55% since mid-March. It has amassed $552.72 million in its asset base and charges an annual fee of 9 bps. It has a traded daily average volume of about 130,000 shares.
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ETFs in Focus After BOE Hikes Interest Rates
After a surprise jump in consumer prices, the Bank of England stepped up to help ease the persistent inflation levels. The bank hiked interest rates by 25 bps to 4.25%. The Consumer Price Index (CPI) jumped to 10.4% annually in February, above the projected consensus of 9.9%. Per CNBC, the sudden increase in the inflation levels came after the rise in food and energy bills, which continues to put pressure on UK households.
According to the Monetary Policy Committee, global growth is expected to be stronger than estimated. A report by the committee states that its aim is to maintain inflation target at levels of 2%, ensuring sustainable growth and employment levels.
The labor market is expected to remain tight with real household disposable income levels remaining flat after the decision of the UK government to maintain the Energy Price Guarantee (EPG) at £2,500 for another three months from April.
Effect of Banking Failures
Per the Fiscal Policy Committee, the regulations in place for the UK banking system ensures that the banks have adequate and robust liquid capital supported by strong liquidity positions, ensuring their resilience.
UK households remain under pressure due to the increased cost of living and rising interest rates. However, fall in energy prices and an improved outlook for employment levels in the country means UK households will get relief in paying mortgages.
Even though confident on the current banking regulations, Bank of England officials maintain the stance that they need to remain alert in the middle of global banking uncertainties. As quoted on Reuters, Bank of England governor, Andrew Bailey said that the bank is prepared to lower the countercyclical credit buffer imposed on lenders, if the latest volatility threatened the credit supply of the economy.
ETFs in Focus
Against this backdrop, we highlight a few ETFs that have reported growth amid global uncertainties
iShares MSCI United Kingdom Small-Cap ETF (EWUS - Free Report)
The iShares MSCI United Kingdom Small-Cap ETF seeks investment results that generally correspond to the price and yield performance, before fees and expenses, of the MSCI United Kingdom Small Cap Index. The fund has 253 securities in its asset basket. Industrials, financials and consumer discretionary hold the top three spots with 20.1%, 16.7% and 15.5% share, respectively.
The fund had lost around 5.25% after the collapse of SVB but has added back 2.76% since mid-March. It has gathered $43.77 million in its asset base and charges an annual fee of 59 bps. The fund has a traded daily average volume of about 2,413 shares.
iShares MSCI United Kingdom ETF (EWU - Free Report)
The iShares MSCI United Kingdom ETF seeks investment results that generally correspond to the price and yield performance of the MSCI United Kingdom Index. The fund has 81 securities in its asset basket with consumer staples taking the top spot with 20%. The next spots are held by financials and energy at 17.4% and 13.6%, respectively.
The fund had lost around 5% after the U.S. regional banking crisis but has gained 5.7% since mid-March. It has amassed $3.16 billion in its asset base and charges an annual fee of 50 bps. The fund has a traded daily average volume of around 1.84 million shares
First Trust United Kingdom AlphaDEX Fund (FKU - Free Report)
The First Trust United Kingdom AlphaDEX ETF seeks investment results that correspond generally to the price and yield, before fees and expenses, of the NASDAQ AlphaDEX United Kingdom Index. The fund has 76 securities in its asset basket with consumer discretionary, financials, materials and industrials all having double-digit weightage of 21.6%, 17.9%, 13.5% and 12.9%, respectively.
The fund fell 6.21% after the regional banking crisis but is up 4.31% since mid-March. The fund has gathered $22.71 million in its asset base and charges 80 bps. It has a traded daily average volume of about 9,600 shares.
Franklin FTSE United Kingdom ETF (FLGB - Free Report)
The Franklin FTSE United Kingdom ETF seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE UK RIC Capped Index. The fund has a basket of 110 securities. Consumer staples and financials are the top two holdings with 18.5% and 17.3% share, respectively.
The fund had lost 4.95% after the collapse of SVB but has added back 4.55% since mid-March. It has amassed $552.72 million in its asset base and charges an annual fee of 9 bps. It has a traded daily average volume of about 130,000 shares.