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In this episode of ETF Spotlight, I speak with Jay Hatfield, founder and CEO of Infrastructure Capital Advisors, about the banking crisis and its implications for investors.
The banking situation appears to be stabilizing over the past few days, and a full-blown financial meltdown has been avoided, thanks to sweeping measures taken by regulators. However, JPMorgan (JPM - Free Report) CEO Jamie Dimon said this week that the crisis is not over and will cause “repercussions for years to come.”
Many depositors are pulling money out of small and medium-sized banks and putting it into big banks or money market funds. Smaller businesses generally bank with local and regional banks, and if they find their access to bank credit restrained, it could cause an economic contraction.
The SPDR S&P Regional Banking ETF (KRE - Free Report) and the iShares U.S. Regional Banks ETF (IAT - Free Report) have plunged more than 28% year-to-date. The Invesco KBW Bank ETF (KBWB), which focuses on big banks, has lost 21% since the crisis started.
Investors will be keeping a close eye on bank earnings starting next week to assess the impact on individual banks.
As banks have suffered their worst declines since 2008, investors have piled into safe-haven assets and mega-cap tech stocks like Apple (AAPL - Free Report) and Microsoft (MSFT - Free Report) . The crisis could force the Fed to change its rate hike plans for the rest of the year, which could benefit these areas.
Many income-focused investors look at preferred stock ETFs due to their juicy yields. They should remember that these products have a lot of exposure to banks. The preferred stocks issued by SVB Financial Group and Signature Bank might have little or no recovery value.
Jay manages three ETFs that aim to meet the needs of income-focused investors. These are generally backed by assets that generate substantial streams of free cash flow and use modest leverage or options strategies to enhance income.
The Virtus InfraCap U.S. Preferred Stock ETF (PFFA - Free Report) has lower exposure to banks compared to other popular preferred ETFs and higher weights to other financial institutions such as insurance companies.
Tune in to the podcast to learn more.
Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.
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Banking Crisis: Implications for ETF Investors
In this episode of ETF Spotlight, I speak with Jay Hatfield, founder and CEO of Infrastructure Capital Advisors, about the banking crisis and its implications for investors.
The banking situation appears to be stabilizing over the past few days, and a full-blown financial meltdown has been avoided, thanks to sweeping measures taken by regulators. However, JPMorgan (JPM - Free Report) CEO Jamie Dimon said this week that the crisis is not over and will cause “repercussions for years to come.”
Many depositors are pulling money out of small and medium-sized banks and putting it into big banks or money market funds. Smaller businesses generally bank with local and regional banks, and if they find their access to bank credit restrained, it could cause an economic contraction.
The SPDR S&P Regional Banking ETF (KRE - Free Report) and the iShares U.S. Regional Banks ETF (IAT - Free Report) have plunged more than 28% year-to-date. The Invesco KBW Bank ETF (KBWB), which focuses on big banks, has lost 21% since the crisis started.
Investors will be keeping a close eye on bank earnings starting next week to assess the impact on individual banks.
As banks have suffered their worst declines since 2008, investors have piled into safe-haven assets and mega-cap tech stocks like Apple (AAPL - Free Report) and Microsoft (MSFT - Free Report) . The crisis could force the Fed to change its rate hike plans for the rest of the year, which could benefit these areas.
Many income-focused investors look at preferred stock ETFs due to their juicy yields. They should remember that these products have a lot of exposure to banks. The preferred stocks issued by SVB Financial Group and Signature Bank might have little or no recovery value.
Jay manages three ETFs that aim to meet the needs of income-focused investors. These are generally backed by assets that generate substantial streams of free cash flow and use modest leverage or options strategies to enhance income.
The Virtus InfraCap U.S. Preferred Stock ETF (PFFA - Free Report) has lower exposure to banks compared to other popular preferred ETFs and higher weights to other financial institutions such as insurance companies.
Tune in to the podcast to learn more.
Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.