The U.S. economy is looking better than previously expected, and investors who are looking to increase their exposure to the domestic market should target financial and healthcare sectors, along with related exchange traded funds.

“You can have kind of a slow recovery, a slow retrenchment from the Fed, slow reflation and that could be a pretty positive backdrop for equities,” Adam Parker, Morgan Stanley’s chief U.S. equity strategist, said on CNBC.

Notably, Parker argues that financial stocks have upside potential, and both Morgan Stanley’s research and client surveys show optimism over the sector. Additionally, Parker believes banks are also set to benefit from a Federal Reserve interest rate hike ahead. [Look to Bank ETFs in a Rising Rate Environment]

“I think you could see much more of that over the next six to nine months, so we really like the financials. I think it has defensive attributes because of share repurchases and dividend growth because of CCAR,” Parker said, referring to the Fed’s process for reviewing capital reserves. “It doesn’t really get affected by currency. And then you have this offensive attribute of an economically sensitive business that’s not really fully embedding that from the valuation perspective.”

Investors interested in the financial sector can take a look at broad options like the Financial Select Sector SPDR (NYSEArca: XLF), iShares U.S. Financials ETF (NYSEArca: IYF) and Vanguard Financials ETF (NYSEArca: VFH). Banks make up 37.2% of XLF, 32.2% of IYF and 40.8% of VFH.

Alternatively, investors can focus on bank stocks through SPDR S&P Regional Banking ETF (NYSEArca: KRE), iShares U.S. Regional Banks ETF (NYSEArca: IAT), PowerShares KBW Bank Portfolio (NYSEArca: KBWB) and SPDR S&P Bank ETF (NYSEArca: KBE). [Bank ETFs Offer Attractive Value]

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