For investors looking for momentum, Financial Select Sector SPDR Fund (XLF - Free Report) is probably a suitable pick. The fund just hit a 52-week high, up roughly 34.4% from its 52-week low of $22.05/share.
But does it have more gains in store? Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:
XLF in Focus
XLF is based on the Financial Select Sector Index. It seeks to provide exposure to companies in the diversified financial services; insurance; banks; capital markets; mortgage real estate investment trusts; consumer finance; and thrifts and mortgage finance industries. XLF has amassed $24.59 billion in its asset base. The fund charges 13 bps in annual fees.
Why the Move?
Certain upbeat U.S. economic data releases, initial progress in the 'phase 1' trade deal along with the Federal Reserve’ rate cut for the third time in 2019 are aiding Wall Street. This in turn is leading to the steepening of the yield curve. In fact, steepening of the yield curve by 23 bps was observed between two-year and 10-year notes on Nov 5. This also marked the steepest point reached by the curve since Jul 25. Notably, banks borrow money at short-term rates and lend capital at long-term rates, which makes steepening of the yield curve a plus for bank ETFs.
More Gains Ahead?
Currently, XLF has a Zacks Rank #2 (Buy) with a Medium risk outlook. Moreover, it seems that the fund will remain strong given a positive weighted alpha of 13.70.
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>>