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.
Other financial services ETFs that re even more rate-sensitive than XLF are being pinched by the sudden upside reversal in Treasurys. For example, the SPDR S&P Regional Banking ETF (NYSEArca: KRE) has tumbled 3.4% over the past week while the SPDR S&P Insurance ETF (NYSEArca: KIE) has traded slightly higher.[Another Rising Rates ETF Breaks Out]
KRE now resides almost 6.3% below its recently touched 52-week high while KIE is just 0.8% below its most recent high. Investors are sticking by these ETFs as August inflows of almost $121 million to KRE and $14.4 million to KIE suggest.
Financial Services Select Sector SPDR
