“Banks have underperformed the overall U.S. equity market thus far this year, amid stress-test results and a general sector rotation away from financial services,” Goldsborough said.
Looking at financial sub-sectors, insurance picks like the SPDR KBW Insurance ETF (NYSEArca: KIE) have underperformed. KIE is up 2.5% year-to-date. [Insurance ETFs Languish in Low-Rate Environment]
“Insurance firms also have lagged amid strong debt and equity markets, which tend to force down insurers’ prices and thus returns on invested capital,” Goldsborough said.
Meanwhile, REITs have surged as rates dipped this year, and an expanding economy has also increased occupancy rates, which have translated to higher rents on tenants. The Vanguard REIT ETF (NYSEArca: VNQ) is up 18.1% year-to-date. [REIT ETFs Enjoying Strong Fundamentals]
For more information on the financials sector, visit our financial category.
Max Chen contributed to this article.