What is noteworthy is that higher interest rates do not guarantee robust long-term performance for bank stocks and ETFs.
“While higher rates may well serve as a tailwind for financials firms over the longer term, any immediate benefit from an interest-rate hike for financial-services firms would be muted at best, as higher rates will not translate one-for-one into higher earnings for banks,” according to Morningstar analyst Robert Goldsborough. “Bank earnings and valuations are driven more by net interest margins, which are more stable over time, than by rates themselves.”
Year-to-date, investors have pulled more than $2 billion from XLF.
Financial Services Select Sector SPDR
