The financial sector ETFs are also cheap relative to the broader S&P 500 Index. IYF shows a 1.4 P/B, XLF has a 1.3 P/B and VFH is trading at a 1.3 P/B. In contrast, the S&P 500 has a 2.5 P/B.
However, the cheapness of U.S. banks belies the strength of the financial sector. Over few years, banks have shed unprofitable businesses and assets while bulking up capital to return some to shareholders through stock buybacks and dividends, the Wall Street Journal reports.
“There’s clearly more turmoil in other parts of the world than there is in the U.S.,” James Gorman, Morgan Stanley’s chairman and chief executive, told the WSJ. “And we think that there’s a potential for, over a period of time, share gain for our business.”
For more information on the financials sector, visit our financial category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of IYF.