Earnings season is kicking off, and financial sector exchange traded funds are in the limelight this week as major banks reveal second quarter results.
On Tuesday, JPMorgan (NYSE: JPM) and Wells Fargo (NYSE: WFC) will report earnings, according to CNBC.
On Wednesday, Bank of America (NYSE: BAC) will reveal results.
On Thursday, Citigroup (NYSE: C) and Goldman Sachs (NYSE: GS) will announce second quarter earnings.
ETF investors can also track the financial space through broad sector ETFs, including the iShares U.S. Financials ETF (NYSEArca: IYF), Financial Select Sector SPDR (NYSEArca: XLF) and Vanguard Financials ETF (NYSEArca: VFH). These broad market capitalization-weighted ETFs include heavy exposure to the major banks.
For instance, XLF’s top holdings include WFC 8.6%, JPM 8.1%, BAC 5.7%, C 5.4% and GS 2.7%. IYF includes WFC 6.4%, JPM 6.1%, BAC 4.3%, C 4.1% and GS 2.0%. VFH holds WFC 6.9%, JPM 6.2%, BAC 4.4%, C 4.1% and GS 2.0%.
The financial sector has been the best performing group over the past three months. After the recent selling pressure, some see the sector as a rare buying opportunity. [Financial ETFs Are the Place to Be]
“We think we can take the banks to the bank,” Craig Johnson, senior technical analyst at Piper Jaffray, said on CNBC. “We think this pullback is a great opportunity. … These are things we should be stepping up to and buying today.”
Looking ahead, the financial sector has an improved outlook as housing and auto sales strengthen, which could add to greater loans and more underwriting fees for banks, Jaffray added. [Ahead of Earnings, Investors Pour Into Bank ETFs]
Additionally, regional banks US Bancorp (NYSE: USB), PNC Financial (NYSE: PNC) and SunTrust (NYSE: STI) are also expected to report earnings this week.
For regional bank exposure, ETF investors can look at the SPDR S&P Regional Banking ETF (NYSEArca: KRE), iShares U.S. Regional Banks ETF (NYSEArca: IAT) and PowerShares KBW Bank Portfolio (NYSEArca: KBWB).
IAT has the largest position to the regional banks, including a 18.0% position in USB, 11.6% in PNC and 5.3% in STI. KBWB has 7.9% USB, 4.1% STI and 4.0% PNC.
For more information on the financial sector, visit our financial category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.