The Claymore/Clear Global, Exchanges, Brokers and Asset Managers Index ETF (EXB) was released in July and since its launch, the market has been through a fair test to determine if it can survive the stress. Roger Nusbaum for TheStreet.com reports that what differentiates this ETF from its peers, iShares Dow Jones U.S. Broker-Dealers (IAI) and KBW Capital Markets ETF (KCE), is its foreign exposure. Since the EXB’s inception, the Hong Kong Exchange has doubled in price, going from more than a 4% weight to an 8% weighting. The international components have helped EXB because global holdings have been better than domestic ones in this sector. For example, when Merrill Lynch (MER) took a big hit recently, EXB was only down a fraction of 1%.
Remember that the financial services sector is the largest in the S&P 500 and is also the most complex. The market needs this sector to go anywhere, and this sector tends to provide warning as to when problems are looming ahead through an inverted yield curve. Nusbaum says that when short-term interest rates are higher than long-term interest rates, the best strategy is to underweight the sector.
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