ETF Spotlight: SPDR KBW Bank ETF (KBE)

June 16th at 12:24pm by Tom Lydon

ETF Spotlight on SPDR KBW Bank ETF (NYSEArca: KBE), part of a weekly series.

The bank ETF was higher in midday trading Thursday as top holding Bank of America (NYSE: BAC) saw its shares advance while Citigroup (NYSE: C) was fractionally lower.

Assets: $1.44 billion

Ojective: The SPDR KBW Bank ETF tries to reflect the performance of the KBW Bank Index (ticker: BKX).

Holdings: Top holdings include: JPMorgan Chase & Co. (NYSE: JPM) 8.76%, Citigroup Inc. (NYSE: C) 6.86%, Wells Fargo & Co. (NYSE: WFC) 6.64%, Bank of America Corp. (NYSE: BAC) 6.36% and US Bancorp 6.04%.

What You Should Know

  • KBE has an expense ratio of 0.35%.
  • The fund has 26 holdings.
  • Sector allocations include: Regional Banks 42.42%, Other Diversified Financial Services 22.02%, Diversified Banks 16.17%, Asset Management & Custody Banks 8.14%, Thrifts & Mortgage Finance 6.78% and Consumer Finance 4.46%.

The Latest News

  • Bank stocks have been under pressure over the past few months as greater regulation and slowing loan growth put a damper on the industry, reports Wallace Wilkowski for MarketWatch.
  • After hitting a high in February, financial stocks under the S&P 500 have plunged 12%, with Citigroup, Morgan Stanley (NYSE: MS), Wells Fargo and Goldman Sachs Group (NYSE: GS) posting declines between 11% and 16%. [Bank ETFs Hit Again on Economy, Capital Levels.]
  • “Banks are dealing with the uncertainty of new rules and the economy, so they can be looked at as a proxy for the economy,” commented Kevin Fitzsimmons, managing director of equity research at Sandler O’Neill. “Investors are less certain of the pace of the economy because there’s not a lot of loan growth, or consumer spending.”
  • The Federal Reserve may require large banking institutions to ask permission each year to pay dividends and make share buybacks, along with more stringent capital requirements. The Federal Deposit Insurance Crop. also adopted rules that require big banks to follow same capital standards as small community banks.
  • John Butters, senior earnings analyst at FactSet Research, believes the financial sector will experience the lowest sector revenue growth within the S&P at 4% for the second quarter.
  • The bank ETF is nearing a bearish technical indicator as key moving averages prepare to cross over. [Bank ETF Nears Bear Cross]

For past stories in this series, visit our ETF Spotlight category.

SPDR KBW Bank ETF


Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Tickers

KBE