Beleaguered financial-sector exchange traded funds (ETFs) were hoping for a reprieve after two banks announced a bit of good news today.
Merrill Lynch (MER) announced that it was going to get $6.6 billion from three foreign funds, reports Stephen Bernard of the Associated Press. The move will allow the company to broaden its worldwide relationships and operations, and investors will receive a 9% dividend.
Minutes after that announcement, Citigroup (C) said that it’s lined up $12.5 billion in new investments, according to Madlen Read of the Associated Press. The bank also cut its quarterly dividend by 41%. That, paired with the investments, will help boost its Tier 1 capital ratio, a measure of its financial strength.
Merril Lynch was down 4.7% today and Citigroup lost over 7%.
Some of the financial ETFs that could feel the good news are:
- Ultra Financials ProShares (UYG), Citigroup is 6.9%; Merrill Lynch is 1.8%
- iShares Dow Jones US Financial Sector (IYF), Citigroup is 5.5%; Merrill Lynch is 1.6%
- Vanguard Financials (VFH), Citigroup is 7.1%; Merrill Lynch is 1.8%
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.