For investors seeking momentum, PowerShares KBW Bank ETF (KBWB - Free Report) is probably on radar now. The fund just hit a 52-week high and is up more than 25% from its 52-week low price of $45.34/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
KBWB in Focus
This product looks to track the KBW Nasdaq Bank Index. Wells Fargo & Co, Bank of America and JPMorgan Chase are the top three holdings. It charges 35 bps in fees (see all Financials ETFs here).
Why the Move?
U.S. Treasury bond yields shot up to start 2018. As of Jan 9, 2018, the yield on the benchmark 10-year Treasury note was 2.55% while the year started with a benchmark bond yield of 2.46%. A recent decision by the Bank of Japan to reduce its monthly bond purchases reinforced the fact that most developed global central banks are eyeing policy tightening this year. Also, many Fed officials commented in a hawkish way in recent times. All these benefited financial ETFs like KBWB as financial stocks perform better in a rising rate environment.
More Gains Ahead?
The fund has a Zacks Rank #3 (Hold). So, it is tough to conclude whether it can surge ahead. It has a positive weighted alpha of 22.60. A positive weighted alpha hints at more gains. As a result, there is definitely some promise for investors who want to ride on this surging ETF.
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