Citing relative rotation data, Azous notes the rotation into still under-owned financials is improving. It is not a stretch to assume that this phenomenon could boost the aforementioned ETFs going forward. With that, it is a good idea to have a look at the widely followed KBW Bank Index (chart at the end of this piece). That index is the underlying benchmark for the $235.8 million PowerShares KBW Bank Portfolio (NYSEArca: KBWB).
Of that index, Azous says that it is likely to eclipse its closing month peak sometime in the current quarter. Notably, KBWB is up nearly 3% over the past month, but investors have missed parts of that move as the ETF has lost over $47 million in assets over the past 30 days. That bolsters the under-allocated to financials thesis.
KBW Bank Index
Chart Courtesy: Neil Azous, Rareview Macro