Proprietary Data Insights Financial Pros’ Top Financials ETF Searches in the Last Month
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Pro Picks: Top 5 Financial ETFs |
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It’s been over a year since Silicon Valley Bank (SVB) and Silvergate Capital (SI) collapsed. While there have been flareups here and there, like New York Community Bank (NYCB), the regional banking sector has largely healed. That’s why we suspect institutional money managers are examining the S&P Regional Banking ETF (KRE) closely. Our TrackStar data shows that amongst all the financial-related ETFs, pros kept eyeballing the KRE 3x more than the broad financial XLF ETF. We’re big fans of the KRE as way to play the regional banking sector, which trades at a historical discount. But before you jump into shares, here’s what you need to know. Key Facts About SMH
KRE zeroes in on the U.S. regional banking sector, tracking the diverse and dynamic S&P Total Market Index (TMI) across all market caps. Its equal-weighting approach ensures no single stock skews the portfolio, offering a balanced and stable investment landscape. Quarterly rebalancing keeps the ETF agile, aligning with the sector’s pulse and maintaining relevance. The top 10 holdings spotlight the leaders in regional banking, showcasing strength, growth potential, and investment appeal in this niche: The fund consists of 140 companies that trade at an aggregate price-to-book ratio of 0.99x, indicating a slight discount on regional banks’ assets. The index itself trades at a P/E ratio of 9.3x and price-to-cash flow of 7.5x. These measures are lower than the 10-year average, mainly because investors worry that higher rates will weigh on the banks’ holdings. However, with a future recession going from probable to unlikely, these same money managers are now taking a fresh look at how higher economic activity would help these banks. Performance The performance listed below seems at odds with what we show as the 5-year total return of 3.1%. However, the data from SSGA’s website uses month-end numbers. The exact difference will change from day-to-day. So, for our purposes, we’ll just say that its flat over five years. Competition There aren’t many other regional banking ETFs that we’d highlight simply because they’re thinly traded. So, we pulled in the other top financial ETF searches by financial pros to see what else they’re looking at.
Like many other ETFs we’ve covered, diversification tends to reduce overall performance. Additionally, it’s noteworthy that larger companies have outperformed the smaller ones.
Our Opinion 10/10 If you want to play the regional banking sector, there is no better ETF than the KRE. It’s a low-cost vehicle that’s excellent for investors who want exposure but don’t want to dive into the details of these companies. Its liquidity allows you to easily enter and exit positions and trade options on the ETF. |
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