It’s Friday. Time to give you a stock pick from our sister newsletter, The Spill, so you can think about it over the weekend and maybe make a move Monday morning. While The Juice helps you be better with money across the board, The Spill focuses on stocks financial pros are researching and judges how good of buys they are. If you’re already sold, you can sign up for The Spill – for free – here.
Proprietary Data Insights
Financial Pros’ Top Financial ETF Searches in the Last Month
A 10/10 Regional Bank ETF
The swift collapse of banks Silvergate Capital (SI) and SVB Financial (SIVB) has shaken investors to their cores.
Are we facing another 2008 financial crisis?
We can’t say for sure. A lot depends on the Federal Reserve’s actions and inflationary pressures.
But these collapses haven’t stopped financial pros from searching for the SPDR S&P Regional Banking ETF (KRE) at a record pace, according to our proprietary Trackstar database.
Does KRE, the most well-known regional banking ETF (exchange-traded fund), fit into your portfolio?
Key Facts About KRE
KRE tracks the regional banking segment of the S&P Total Market Index (TMI), which tracks U.S. equities of all market caps.
The ETF uses equal weighting to avoid any single stock causing massive dislocation.
Holdings are rebalanced quarterly.
The current top 10 holdings are as follows:
Source: State Street
Until recently, SI and SVB were two of the ETF’s top 10 holdings.
Despite a terrible 2023 so far, KRE’s 10-year return is pretty decent.
Source: First Trust
But the ETF is down more than 29% in the last three weeks.
That may, however, be the value investors are looking for.
There aren’t too many other regional bank ETFs. So we’ve included some other banking and financial ETFs in our comparison:
IAT is similar to KRE in its investment philosophy. But as you’ll notice below, it has a higher expense ratio, lower dividend yield, and worse returns over five years.
KBWR is also pretty close and has a better five-year performance record than KRE, but a slightly lower dividend yield.
Annual Dividend Yield
Five-Year Cumulative Performance
Our Opinion 10/10
Warren Buffett would say the risk/reward balance is in your favor here.
That doesn’t mean you should throw everything at KRE at once.
Averaged over time, a risk-adjusted (i.e., smaller) position stands a good chance of outperforming the broader market.
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