ETF Trends
ETF Trends

Greater mergers and acquisitions activity in the financial sector has been delivering a nice bump for regional banking exchange traded funds (ETFs).

The Keefe, Bruyette & Woods Regional Bank Index rose 3% this month on regional banking M&A activity, reports Laurie Kulikowski for TheStreet. Morgan Keegan analysts remarked that “bank M&A is picking up steam” and that “banks are actively talking to each other and evaluating strategic options as they look to manage at the other side of the credit cycle.” [Regional Bank ETFs Benefit from M&A Boom.]

Most recently, Hancock Holding Co. (NYSE: HBHC) and Whitney Holding (NYSE: WTNY) merged in a $1.49 billion stock deal.

This week, regional banks mostly led the financial sector to positive territory, writes Sam Mamudi for MarketWatch. Speculation on more mergers and deals has been rising, especially after Marshall & Ilsley Corp. (NYSE: MI) agreed to bought out by Bank of Montreal (NYSE: BMO) for $4.1 billion. [Regional Bank ETFs: Best and Worst Performing Banks.]

For more information on regional banks, visit our regional banks category.

  • SPDR KBW Regional Bank (NYSEArca: KRE): up 17.3% in the last month.
  • iShares Dow Jones U.S. Regional Banks (NYSEArca: IAT): up 15.2% in the last month.
  • First Trust NASDAQ ABA Community Bank (NYSEArca: QABA): up 14.4% in the last month; QABA  is made up of smaller, local banks that share many characteristics with regionals.
  • Direxion Daily Financial Bull 3x Shares (NYSEArca: FAS): Though this fund tracks primarily large-cap companies, if you’re bullish on financials, consider this play – but use caution, of course.
  • PowerShares S&P SmallCap Financials (NYSEArca: XLFS): up 8.5% in the last month. XLFS holds a mix of small-cap REITs, community banks and insurers.
  • Rydex S&P Equal Weight Financials (NYSEArca: RYF): Equal weighting puts all components on a level playing field, giving smaller companies as much a say in performance as the bigger ones. This may be contributing to RYF’s outstanding performance of late – it’s up 20.8% in the last six months.
  • IQ Merger Arbitrage (NYSEArca: MNA): Though it’s down in both the short- and long-term, this ETF is designed to capture activity in the M&A space. Will it benefit from regional bank M&As? Time will tell.

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. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.