ETFs with exposure to regional banks have actually benefited from rising interest rates because investors believe higher interest rates will lead to increased net interest margin for regional banks.
Reminding investors of just how sensitive regional banks are to interest rate changes are these statistics. When Treasury yields jumped in 2013, KRE surged 47.5%. Amid the 2014 yield retreat, the ETF rose just 1.8% while the S&P 500 climbed 13.5%. KRE’s holdings have an average beta of +0.44 to moves in the US 10 Year Treasury. [Regional Rebound Could Lift Bank ETFs]
KRE is home to 86 stocks and a trailing 12-month dividend yield of 1.63%.
SPDR S&P Regional Banking ETF
Chart Courtesy: Andrew Thrasher