With U.S. equities market moseying along, investors may find greater opportunities targeting specific areas in the market, such as the financial sector and related exchange traded funds.
According to a recent research note, BlackRock is overweight financials for the second half of the year.
“Strong mergers and acquisitions activity, a busy underwriting calendar and increased loan demand tend to support financials sector earnings,” BlackRock analysts said.
Moreover, looking at market data over the past 10 years, analytics firm Kensho found that the the S&P 500 Financial Sector has averaged a 1.7% gain, compared to the broader S&P 500’s average 1.6% rise, reports Dominic Chu for CNBC.
To capture the potential growth opportunity, investors can take a look at broad financial sector ETFs, including the iShares U.S. Financials ETF (NYSEArca: IYF), Financial Select Sector SPDR (NYSEArca: XLF) and Vanguard Financials ETF (NYSEArca: VFH). [Target Financial, Healthcare ETFs Ahead]
XLF focuses on some of the largest financial names taken from the S&P 500. IYF has a slightly broader exposure to financials, tracking the Do Jones US Financial index. Lastly, VFH takes an even broader approach by selecting financial firms from the MSCI U.S. Investable Market 2500 Index.
Investors can also focus on bank stocks as expanding economy could push more to take up new loans.