The financial sector appears to have turned over a new leaf as the country takes more conservative measures in response to the 2008 financial crisis. Consequently, consumer finance exchange traded funds are looking much healthier.
“We have a positive view on the consumer finance sub-sector,” writes Sonia Parechanian, S&P Capital IQ Equity Analyst, in a research note. “We have seen the consumer deleverage and household savings rates rise, and consumers appear to be prudently cautious in taking on new debt. Also helpful, the housing market appears to be rebounding.”
A number of economic indicators also points to a stronger financial sector. For instance, the Conference Board Consumer Confidence Index is up to 69.6 in February from 58.4 in January. According to the Conference Board, those anticipating jobs in the months ahead rose to 16.7% in February from 14.4% in January. Consumer credit outstanding increased to 7.0% in January from 5.9% over 2012.
The consumer finance sub-industry sector gained 29.9% in 2012, outperforming the 13.7% rise in the S&P 1500. However, the sub-sector has fallen behind the broader market so far this year.
The S&P analysts, though, believe that the risk averse marketplace will be the sector’s next challenge.