Since it feels like there is not enough attention being paid to upcoming corporate earnings season, we might as well start here today in speaking about relevant ETF options activity that may very well be predicated on these catalysts.
XLF (SPDR Financials Select Sector, Expense Ratio 0.15%, $19.3 billion in AUM), the largest Financials Equity ETF product has seen some heavier interest in the December 26 calls recently (with the product trading in the low $25’s currently) and the sector has marginally outpaced the broader market S&P 500 Index year to date and to a greater extent in the trailing one year period.
In spite of the stronger performance, the fund has actually seen notable net outflows year to date, with more than $2.1 billion leaving the ETF via redemption activity. Top holdings in XLF include the major money center banks as well as Warren Buffett’s Berkshire Hathaway Inc. Class “B” shares.
The top five weightings appear as follows: WFC (8.64%), BRK.B (8.59%), JPM (8.08%), BAC (5.72%), and C (5.40%). Given that the July options we are speaking about in XLF expire on 7/17/15, we note that four out of the five of the top holdings within the ETF report their quarterly earnings results before the 17th, specifically with WFC and JPM kicking off reporting season among the Financials on 7/14/15.
BAC reports on the 15th, followed by C on 7/16. BRK.B actually does not report until the very end of July on 7/31. Several other prominent Financials Equity ETFs to keep an eye on in the near term and through earnings season include the $3.2 billion VFH (Vanguard Financials, Expense Ratio 0.12%), the $3 billion KBE (SPDR S&P Bank, Expense Ratio 0.35%), the $2.5 billion KRE (SPDR S&P Regional Banking, Expense Ratio 0.35%), and the $1.5 billion IYF (iShares U.S. Financials, Expense Ratio 0.43%) to name the largest funds in AUM terms in the category.