The impact has been palpable. XLF, the largest financial services ETF by assets, is up 4% this month, betraying ominous seasonality that usually sees the fund rank as the worst of the nine sector SPDRs in June. [Bad Sector ETFs in June]
That after investors added $545 million to XLF last month. KRE captured $243.4 million in new investments last month while KBE hauled in almost $90 million.
Bank valuations are also back up. Looking at price-to-book multiples, the most popular measure for valuing the sector, U.S. banks of the KBW banks index are trading near fair value at a 16% premium to book value, or about the same valuations in the summer of 2008. The sector has shown it is capable of trading a even higher valuations of three or even five times book value, but banks are unlikely to return to the late 199s levels. [Muted Bank ETF Expectations]
Through June 17, investors had poured $1.27 billion into XLF this month. KRE and KBE pulled in $352.5 million and $176.7 million, respectively.
Financial Services LTEG
Chart Courtesy: Yardeni Research