After a week like this, in which many financial exchange traded funds (ETFs) have rapidly gained, then just as rapidly plummeted and so on, it’s worth taking a look at the assets.
Although today was a better one than a few of the others seen this week, with all this stomach-churning volatility, you almost have to wonder who is in the financial sector right now. As we’ve pointed out before, these funds are about 50% off their highs, which were reached earlier last year.
Despite announcements of a government bailout plan that will be fleshed out this weekend, there are no assurances yet that this crisis is over. No one can predict whether yet more banks will fall, or if this is all just the beginning of the end to this more than year-long mess.
The largest financial ETF, Financial Select Sector SPDR (XLF), has exposure to some of the biggest names in the news this week, including Bank of America (BAC). The fund has $7.7 billion dollars and is 47.4% off its high reached on June 1, 2007. It’s down 34.8% year-to-date.
iShares Dow Jones US Broker-Dealers (IAI) is down 51.2% since its June 15, 2007, high and is down 48.7% year-to-date. Lehman Brothers is a major holding in this fund, with 4.3% of the assets, and it has $163 million in assets.
KBW Bank (KBE) is down 40.4% off its Feb. 26, 2007, high and is down 25.2% year-to-date. It has $1.1 billion in assets.
Vanguard Financials (VFH) counts American International Group (AIG) as a top holding, with a 3.9% weighting in the insurer. It’s down 41% since hitting a high on Feb. 26, 2007, and is down 30% year-to-date.
We heartily advocate sticking to a plan – even more so in times like these when everything is so uncertain. We’ve seen it all week: a day with a more than 500-point loss, followed by a day with a huge jump, followed by a day with another big loss. Investors who stuck to the plan and chose to watch from the sidelines until the trends turn positive should be feeling decent right now.